To amend laws relating to Federal procurement, to authorize functions and activities under the Federal Property and Administrative Services Act of 1949, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

May 24, 1993

Mr. CONYERS (for himself and Mr. DELLUMS) introduced the following bill; which was referred jointly to the Committees on Government Operations and Armed Services

June 13, 1994

Reported from the Committee on Government Operations with an amendment

[Strike out all after the enacting clause and insert the part printed in boldface roman]

June 17, 1994

Additional sponsors: Mr. CLINGER, Mr. KLECZKA, and Mrs. MALONEY

June 17, 1994

Reported from the Committee on Armed Services with amendments, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed

[Strike out all after the enacting clause and insert the part printed in italic]

[For text of introduced bill, see copy of bill as introduced on May 24, 1993]

A BILL

To amend laws relating to Federal procurement, to authorize functions and activities under the Federal Property and Administrative Services Act of 1949, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Federal Acquisition Improvement Act of 1993’.

TITLE I--ENHANCEMENT OF COMPETITION IN CONTRACTING

Subtitle A--Acquisition of Commercial Items

SEC. 111. PREFERENCE FOR ACQUISITION OF COMMERCIAL ITEMS.

Section 16 of the Office of Federal Procurement Policy Act (41 U.S.C. 414) is amended by redesignating paragraphs (2), (3), and (4) in order as paragraphs (3), (4), and (5), respectively, and by inserting after paragraph (1) the following new paragraph:

‘(2) implement a preference for the acquisition of commercial items by--

‘(A) whenever practicable, stating specifications in solicitation for bids and proposals in terms such that bidders and offerors are enabled and encouraged to offer to supply commercial items in response to agency solicitations;

‘(B) reducing impediments to the acquisition of commercial items in agency procurement policies, practices, and procedures not required by law; and

‘(C) requiring training of appropriate personnel in the acquisition of commercial items;’.

SEC. 112. ACQUISITION OF COMMERCIAL ITEMS.

Section 28 of the Office of Federal Procurement Policy Act (41 U.S.C. 424) is amended to read as follows:

‘SEC. 28. ACQUISITION OF COMMERCIAL ITEMS.

‘(a) MARKET RESEARCH- Before soliciting bids or proposals for a contract for property or services, an executive agency shall conduct market research, appropriate to the circumstances, to determine whether the needs of the agency can be met by the acquisition of commercial items.

‘(b) ADVOCATE FOR ACQUISITION OF COMMERCIAL ITEMS-

‘(1) ESTABLISHMENT- There is established in the Office of Federal Procurement Policy the position of Advocate for the Acquisition of Commercial Items (hereinafter in this subsection referred to as the ‘Advocate’).

‘(2) FUNCTIONS- The Advocate shall--

‘(A) monitor compliance by executive agencies with the preference required under section 16(2) for the acquisition of commercial items;

‘(B) make recommendations and proposals to the Administrator regarding the reform of procurement statutes and regulations to implement that preference; and

‘(C) report to the Administrator on the prospective effect of proposed statutes and regulations on the acquisition of commercial items.’.

SEC. 113. REGULATIONS AND SIMPLIFIED FORM CONTRACTS.

(a) REVISION OF FAR- Unless otherwise specifically provided in this title, not later than 180 days after the date of the enactment of this title, the Federal Acquisition Regulation issued under section 25(c) of the Office of Federal Procurement Policy Act (41 U.S.C. 421(c)) shall be revised to implement the amendments made by this subtitle.

(b) SIMPLIFIED UNIFORM CONTRACT- (1)(A) The revision of the Federal Acquisition Regulation under subsection (a) shall include issuance of one or more simplified uniform contracts for the acquisition of commercial items by Federal agencies and shall require that such simplified uniform contract or contracts be used for the acquisition of commercial items to the maximum extent practicable. The uniform contract or contracts shall include only--

(i) those contract clauses that are required to implement provisions of law applicable to such an acquisition;

(ii) those contract clauses that are essential for the protection of the Federal Government’s interest in such an acquisition; and

(iii) those contract clauses that are determined to be consistent with standard commercial practice and appropriate for inclusion in such contracts.

(B) In addition to the clauses described under subparagraph (A), contracts for the acquisition of commercial items may include such clauses as are essential for the protection of the Federal Government’s interest in--

(i) a particular contract, as determined in writing by the contracting officer for such contract; or

(ii) a class of contracts, as determined by the agency head, in consultation with the Administrator for Federal Procurement Policy.

(C) Contracts for the acquisition of commercial items may not include any clause other than those clauses authorized under subparagraph (A) or (B).

(2)(A) Except as provided in subparagraph (B), a prime contractor under a Federal agency contract for the acquisition of commercial items may only be required to include in subcontracts under such contract--

(i) those contract clauses that are required to implement provisions of law applicable to such subcontracts; and

(ii) those contract clauses that are essential for the protection of the Federal Government’s interest in such subcontracts.

(B) In addition to the clauses described under subparagraph (A), a contractor under a Federal agency contract for the acquisition of commercial items may be required to include in a subcontract under such contract such clauses as are essential for the protection of the Federal Government’s interest in--

(i) a particular subcontract, as determined in writing by the contracting officer for such contract; or

(ii) a class of subcontracts, as determined by the agency head, in consultation with the Administrator for Federal Procurement Policy.

(C) A Federal agency may not require a contractor for the acquisition of commercial items to include in a subcontract for that acquisition any clause other than those clauses authorized under subparagraph (A) or (B).

(3) Notwithstanding paragraphs (1) and (2) of this subsection, the Department of Defense may use uniform contract clauses developed under paragraphs (2) and (3) of section 824(b) of the National Defense Authorization Act for Fiscal Years 1990 and 1991 (10 U.S.C. 2325 note; P.L. 101-189) until September 30, 1995.

(c) WARRANTIES- The Federal Acquisition Regulation shall require that, to the maximum extent practicable, Federal agencies take advantage of warranties offered by commercial contractors and use such warranties for the repair and replacement of commercial items.

(d) MARKET ACCEPTANCE- The Federal Acquisition Regulation shall direct agencies to require, where appropriate and in accordance with criteria prescribed in the regulations, offerors to demonstrate in their offers that products being offered have--

(1)(A) achieved a level of commercial market acceptance necessary to indicate that the products are suitable for the agency’s use; or

(B) been satisfactorily supplied under current or recent contracts for the same or similar requirements; and

(2) otherwise meet the product description, specifications, or other criteria prescribed by the public notice and solicitation.

(e) PAST PERFORMANCE- The Federal Acquisition Regulation shall provide guidance to Federal agencies on the use of past performance of products and sources as a factor in award decisions.

Subtitle B--Miscellaneous

SEC. 121. TRUTH IN NEGOTIATIONS ACT.

(a) AMENDMENTS- Section 304(d)(4) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 254(d)(4)) is amended to read as follows:

‘(4) AUTHORITY TO REQUIRE COST OR PRICING DATA- When cost or pricing data need not be required to be submitted pursuant to paragraph (5), such data shall not be required to be submitted unless the head of the agency determines that such data are necessary for the evaluation by the agency of the reasonableness of the price of the contract or subcontract. In any case in which the head of the agency requires such data to be submitted under this paragraph, the head of the agency shall document in writing the reasons for such requirement.’.

(b) REQUIREMENT FOR REVISED REGULATIONS- Not later than 180 days after the date of enactment of this Act, the Federal Acquisition Regulation issued under section 25(c) of the Office of Federal Procurement Policy Act (41 U.S.C. 421(c)) shall be revised to implement section 304(d)(4) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 254(d)) and section 2306a(b) of title 10, United States Code, as amended by subsection (a) and section 302.

(c) PROVISIONS TO BE INCLUDED- (1) In the case of contracts other than cost-reimbursement research and development contracts, the revised regulations promulgated under subsection (b) shall provide that cost or pricing data may not be requested from a contractor when it is likely that circumstances will exist in which an exception to the requirement to provide such data is authorized by section 304(d)(5) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 254(d)) or section 2306a(b) of title 10, United States Code, unless the head of the agency determines in writing that such data are necessary for the evaluation by the agency of the reasonableness of the price of the contract or subcontract.

(2) The regulations also shall provide clear standards for determining whether the exceptions authorized by such sections apply. In the case of the exception provided under section 304(d)(5)(A)(i) of such Act and section 2306a(b)(1)(A) of such title (relating to adequate price competition), the regulations shall specify the criteria that will be used to determine whether adequate price competition exists. In the case of the exception provided under section 304(d)(5)(A)(ii) of such Act and section 2306a(b)(1)(B) of such title (relating to established catalog or market prices of commercial items sold in substantial quantities to the general public), the regulations shall preclude the consideration of sales to the government, including the percentage of an item’s overall sales that are made to the Government, when determining whether the item has been sold in substantial quantities to the public.

(c) COMMERCIAL ITEM DEFINED- In this title, the term ‘commercial items’ has the meaning given that term in section 4 of the Office of Federal Procurement Policy Act (41 U.S.C. 403), as amended by subsection (a).

SEC. 123. EFFECTIVE DATE.

Unless otherwise specifically provided in this title, the amendments made by this title shall be effective 180 days after the date of the enactment of this title.

SEC. 124. PROVISIONS NOT AFFECTED.

Nothing in this title shall be construed as amending, modifying, or superseding, or is intended to impair or restrict authorities or responsibilities under--

(2) title IX of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 541 et seq.), commonly referred to as the ‘Brooks Architect-Engineers Act’;

(3) the Small Business Act (15 U.S.C. 631 et seq.), including section 8(a) of that Act (15 U.S.C. 637(a)); or

(4) the Act of June 25, 1938 (41 U.S.C. 46-48c), commonly referred to as the ‘Javits-Wagner-O’Day Act’.

TITLE II--AMENDMENTS TO FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949

SEC. 201. AWARD OF MULTIPLE CONTRACTS.

Section 303B of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253b) is amended by adding at the end the following:

‘(g) AWARD OF MULTIPLE CONTRACTS- In procuring any supply or service using competitive procedures, an executive agency may award more than one contract for the same supply or service in any case in which the head of the agency determines that it is in the best interests of the Government to award those contracts for the purpose of maintaining a continuous source for the supply or service.’.

(B) by striking ‘(including price)’ and inserting ‘(including cost or price, cost- or price-related factors, and noncost- or nonprice-related factors)’;

(2) in subsection (b)(1)(B) by inserting ‘and subfactors’ after ‘factors’;

(3) in subsection (b)(2)(B) by amending clause (i) to read as follows:

‘(i) a statement that the proposals are intended to be evaluated with, and award made after, discussions with the offerors, or that the proposals are intended to be evaluated, and award made, without discussions with the offerors (other than discussions conducted for the purpose of minor clarification), unless discussions are determined to be necessary; and’; and

(4) by adding at the end the following new subsection:

‘(c) ESTABLISHING IMPORTANCE OF FACTORS- (1) In prescribing the evaluation factors to be included in each solicitation for competitive proposals, the head of an agency--

‘(A) shall clearly establish the relative importance assigned to the evaluation factors and subfactors, including the quality of the product or services to be provided (including technical capability, management capability, and prior experience of the offeror);

‘(B) shall include cost or price to the Government as an evaluation factor that must be considered in the evaluation of proposals; and

‘(C) shall, at a minimum, disclose to offerors whether all evaluation factors other than price or cost, when combined, are--

‘(i) significantly more important than price or cost,

‘(ii) approximately equal in importance to price or cost, or

‘(iii) significantly less important than price or cost.

‘(2) Nothing in this subsection prohibits an agency from--

‘(A) providing additional information in a solicitation, including numeric weights for all evaluation factors; or

‘(B) stating in a solicitation that award will be made to the offeror that meets the solicitation’s mandatory requirements at the lowest price or cost.’.

(1) in subsection (a) by inserting ‘and award a contract’ after ‘competitive proposals’;

(2) in subsection (c) in the second sentence by inserting ‘in accordance with subsection (a)’ after ‘shall evaluate the bids’;

(3) in subsection (d) by amending paragraph (1) to read as follows:

‘(1) The executive agency shall evaluate competitive proposals in accordance with subsection (a) and may award a contract--

‘(A) after discussions with the offerors, if written or oral discussions have been conducted with all responsible offerors who submit proposals within the competitive range; or

‘(B) without discussions with the offerors (other than discussions conducted for the purpose of minor clarification), if the solicitation included a statement that proposals are intended to be evaluated, and award made, without discussions, unless discussions are determined to be necessary.’; and

(4) in subsection (d) by striking paragraphs (2) and (3) and by redesignating paragraph (4) as paragraph (2).

(c) APPLICATION-

(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to--

(A) solicitations for sealed bids or competitive proposals issued after the end of the 180-day period beginning on the date of the enactment of this Act; and

(B) contracts awarded pursuant to those solicitations.

(2) EARLIER APPLICATION- The head of an agency may apply the amendments made by this section to solicitations issued before the end of the period referred to in paragraph (1). The head of the agency shall publish in the Federal Register notice of any such earlier date of application before the beginning of the 10-day period ending on that date.

SEC. 203. CERTIFIED COST OR PRICING DATA THRESHOLD.

(A) by striking out ‘$100,000’ each place it appears and inserting in lieu thereof ‘the cost or pricing data threshold’; and

(B) by adding at the end the following new paragraph:

‘(6) For the purposes of this subsection, the term ‘the cost or pricing data threshold’ means $500,000, or, after December 31, 1995, $100,000.’.

(2) APPLICATION- The amendments made by this subsection shall apply to--

(A) prime contracts, or subcontracts (without regard to the date on which the associated prime contract was awarded), entered into after the date on which the Federal Acquisition Regulation is promulgated pursuant to section 204; and

(B) changes or modifications to prime contracts or subcontracts when those changes or modifications are entered into after the date on which a final revision of the Federal Acquisition Regulation is issued pursuant to section 204.

(3) MODIFICATION- Upon the request of a contractor, the head of an agency may modify a contract to reflect the dollar thresholds set forth in the revision to the Federal Acquisition Regulation issued pursuant to section 204. Any such modification shall be made without requiring consideration.

(b) REGULATIONS FOR BELOW-THRESHOLD PROCUREMENTS-

(1) TYPE OF PROCUREMENTS- The Administrator of General Services, in consultation with the Administrator for Federal Procurement Policy, shall prescribe regulations identifying the type of procurements for which contracting officers should consider requiring the submission of certified cost or pricing data under section 304(d) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C 254).

(2) TYPES OF INFORMATION- The Administrator of General Services, in consultation with the Administrator for Federal Procurement Policy, shall prescribe regulations concerning the types of information that offerors may be required to submit for a contracting officer to consider in determining whether the price of a procurement to the Government is fair and reasonable when certified cost or pricing data are not required to be submitted under section 304(d) of such Act because the price of the procurement to the United States is not expected to exceed $500,000. Such information, at a minimum, shall include appropriate information on the prices at which such offeror has previously sold the same or similar products.

(3) DEADLINE- The regulations required under this subsection shall be prescribed no later than 6 months after the date of the enactment of this Act.

(2) CLERICAL AMENDMENT- The first section of the Federal Property and Administrative Services Act of 1949 is amended in the table of contents by striking the item relating to section 303E.

(d) REVIEW OF AMENDMENTS-

(1) IN GENERAL- After the amendments made by subsections (a) and (c) have been in effect for 1 year, the Comptroller General shall conduct a review of the effects of the amendments. The Comptroller General shall coordinate that review, insofar as possible, with the review conducted by the Inspector General of the Department of Defense pursuant to section 803(b) of the National Defense Authorization Act for Fiscal Year 1991 (Public Law 101-510).

(2) FACTORS CONSIDERED- The review conducted under paragraph (1) shall address whether the amendments made by subsections (a) and (c) have improved the acquisition process in terms of reduced paperwork, financial or other savings to the Government, an increase in the number of contractors participating in the contracting process, and the adequacy of information available to contracting officers in cases in which certified cost or pricing data are not required.

(3) REPORT- Not later than the date on which the President submits the budget for fiscal year 1996 to the Congress pursuant to section 1105 of title 31, United States Code, the Comptroller General shall submit to the Congress a report on the review conducted under paragraph (1). The report shall include the comments of the Administrator for Federal Procurement Policy and the Administrator of General Services.

SEC. 204. REVISION OF FEDERAL ACQUISITION REGULATION; EFFECTIVE DATE.

(a) REVISION OF FAR- Unless otherwise specifically provided in this title, not later than 180 days after the date of the enactment of this Act, the Federal Acquisition Regulation issued under section 25(c) of the Office of Federal Procurement Policy Act (41 U.S.C. 421(c)) shall be revised to reflect the amendments made by sections 201, 202, 203(a) and (c), and 301.

(b) EFFECTIVE DATE- Unless otherwise specifically provided in this title, the amendments made by this title and section 301 shall be effective 180 days after the date of the enactment of this Act.

(c) STANDARDS AND REQUIREMENTS FOR COST AND PRICE AS EVALUATION FACTORS-

(1) IN GENERAL- The Federal Acquisition Regulation, as revised pursuant to subsection (a), shall establish standards and requirements for the consideration of cost and price to the Government as evaluation factors under the amendments made by sections 202(a)(4) and 301.

(2) STANDARDS AND REQUIREMENTS- Standards and requirements established under paragraph (1) shall be adequate to ensure that, to the maximum extent practicable consistent with the needs of the Federal Government in conducting procurements--

(A) cost or price is an evaluation factor of sufficient weight to affect each source selection decision; and

(B) competition among competing offerors is affected by cost or price.

TITLE III--AMENDMENTS RELATING TO TITLE 10, UNITED STATES CODE

SEC. 301. SOURCE SELECTION FACTORS.

Paragraph (3) of section 2305(a) of title 10, United States Code, is amended to read as follows:

‘(3)(A) In prescribing the evaluation factors to be included in each solicitation for competitive proposals, the head of an agency--

‘(i) shall clearly establish the relative importance assigned to the evaluation factors and subfactors, including the quality of the product or services to be provided (including technical capability, management capability, and prior experience of the offeror);

‘(ii) shall include cost or price to the Government as an evaluation factor that must be considered in the evaluation of proposals; and

‘(iii) shall, at a minimum, disclose to offerors whether all evaluation factors other than price or cost, when combined, are--

‘(I) significantly more important than price or cost,

‘(II) approximately equal in importance to price or cost, or

‘(III) significantly less important than price or cost.

‘(B) Nothing in this paragraph prohibits an agency from--

‘(i) providing additional information in a solicitation, including numeric weights for all evaluation factors; or

‘(ii) stating in a solicitation that award will be made to the offeror that meets the solicitation’s mandatory requirements at the lowest price or cost.’.

SEC. 302. TRUTH IN NEGOTIATIONS.

Section 2306a(c) of title 10, United States Code, is amended to read as follows:

‘(c) AUTHORITY TO REQUIRE COST OR PRICING DATA- When cost or pricing data need not be required to be submitted pursuant to subsection (b), such data shall not be required to be submitted unless the head of the agency determines that such data are necessary for the evaluation by the agency of the reasonableness of the price of the contract or subcontract. In any case in which the head of the agency requires such data to be submitted under this subsection, the head of the agency shall document in writing the reasons for such requirement.’.

TITLE IV--BROOKS ACT AMENDMENTS

SEC. 401. SHORT TITLES OF CERTAIN PROVISIONS OF FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949.

(a) AUTOMATIC DATA PROCESSING EQUIPMENT PROVISIONS- Section 111 of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 759) is amended by adding at the end the following new subsection:

‘(i) This section may be cited as the ‘Brooks Automatic Data Processing Act’.’.

(b) ARCHITECTURAL AND ENGINEERING SERVICES PROVISIONS- Title IX of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 541-544) is amended by adding at the end the following new section:

‘SEC. 905. SHORT TITLE.

‘This title may be cited as the ‘Brooks Architect-Engineers Act’.’.

SEC. 402. DISMISSAL; AWARD OF COSTS.

Section 111(f)(4) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 759(f)(4)) is amended by striking subparagraph (C) and inserting the following:

‘(C) The board may dismiss a protest that the board determines--

‘(i) is frivolous,

‘(ii) has been brought in bad faith, or

‘(iii) on its face does not state a valid basis for protest.

‘(D) If a party violates or fails to comply in good faith with, or causes a violation of or failure to comply in good faith with, an order or decision of the board, the board may require that party to pay to any other party the amount of any reasonable costs, including attorney’s fees, incurred by the other party in seeking compliance with such order or decision.’.

Section 111 of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 759), as amended by this Act, is further amended by inserting after subsection (g) the following new subsection:

‘(h)(1) The Administrator shall collect and compile data from Federal agencies regarding the procurement of automatic data processing equipment under this section. That data shall include, at a minimum, with regard to those procurements specified by the Administrator in regulation--

‘(A) the procuring agency,

‘(B) the contractor,

‘(C) the automatic data processing equipment and services procured,

‘(D) the manufacturer of the equipment procured,

‘(E) the amount of the contract,

‘(F) the type of contract used,

‘(G) the extent of competition for award,

‘(H) compatibility restrictions, and

‘(I) significant modifications of the contract.

‘(2) The head of each Federal agency shall report to the Administrator in accordance with regulations issued by the Administrator all information required to be compiled by the Administrator under paragraph (1).

‘(3) The Administrator--

‘(A) shall carry out a systematic review and conduct periodic audits of information received under this subsection;

‘(B) shall use such information as appropriate to determine the compliance of Federal agencies with the requirements of this section; and

‘(C) may suspend the delegation to an agency of authority to lease and purchase automatic data processing equipment upon any substantial failure by the head of the agency to report to the Administrator in accordance with this subsection.

‘(4) The Administrator shall, upon receipt of information that a Federal agency has failed to comply with the terms of any delegation of authority to lease or purchase automatic data processing equipment or has failed to comply with any applicable law or regulation, take appropriate corrective action.

‘(5) Data collected pursuant to this section shall be drawn from existing Federal agency information resources, and no new or additional information reporting requirements may be imposed on offerors or contractors for that purpose.’.

SEC. 404. EFFECTIVE DATE.

The amendments made by this title shall take effect on the date which is 180 days after the date of the enactment of this title.

TITLE V--MISCELLANEOUS PROVISIONS

SEC. 501. PROCUREMENT PROTEST SYSTEM IMPROVEMENTS.

(a) GAO RECOMMENDATIONS ON PROTESTS- Section 3554 of title 31, United States Code, is amended--

(1) in subsection (b) by adding at the end the following new paragraph:

‘(3) The head of the procuring activity responsible for the solicitation, proposed award, or award of a contract shall report to the Comptroller General if the Federal agency has not fully implemented recommendations of the Comptroller General under this subsection with respect to that contract within 60 days after receiving the recommendations, by not later than the end of that 60-day period.’;

(2) in subsection (c)(1) by striking ‘declare an appropriate interested party to be entitled to’ and inserting ‘recommend that the Federal agency conducting the procurement pay to an appropriate interested party’;

(3) by amending subsection (c)(2) to read as follows:

‘(2) If the Comptroller General recommends under paragraph (1) that a Federal agency pay an amount of costs to an interested party, the Federal agency shall--

‘(A) pay the amount promptly out of amounts appropriated by section 1304 of this title for the payment of judgments, and reimburse that appropriation account out of available funds or by obtaining additional appropriations for that purpose, or

‘(B) report to the Comptroller General promptly why the recommendation will not be followed by the agency.’.

(4) by adding at the end of subsection (c) the following new paragraph:

‘(3) An interested party to which the Comptroller General has recommended that costs be paid under paragraph (1) and the Federal agency recommended to pay those costs shall attempt to reach agreement on the amount of the costs to be paid, but if they are unable to agree, a party may request that the Comptroller General recommend the amount of the costs to be paid.’; and

(5) by amending subsection (e) to read as follows:

‘(e)(1) The Comptroller General shall report promptly to the Committee on Government Operations and the Committee on Appropriations of the House of Representatives and to the Committee on Governmental Affairs and the Committee on Appropriations of the Senate in any case in which a Federal agency fails to implement fully a recommendation of the Comptroller General under subsection (b) or (c). The report shall include--

‘(A) a comprehensive review of the pertinent procurement, including the circumstances of the failure of the Federal agency to implement a recommendation of the Comptroller General, and

‘(B) a recommendation regarding whether, in order to correct inequity or to preserve the integrity of the procurement process, the Congress should consider--

‘(i) private relief legislation;

‘(ii) legislative rescission or cancellation of funds;

‘(iii) further investigation by the Congress; or

‘(iv) other action.

‘(2) Not later than January 31 of each year, the Comptroller General shall transmit to the Congress a summary report describing each instance in which a Federal agency did not fully implement a recommendation of the Comptroller General under subsection (b) or (c) during the preceding year.’.

(b) RATIFICATION OF PRIOR AWARDS- Amounts to which the Comptroller General declared an interested party to be entitled under section 3554 of title 31, United States Code, as in effect immediately before the enactment of this Act, shall, if not paid or otherwise satisfied by the Federal agency concerned before the date of the enactment of this Act, be paid promptly from the appropriation made by section 1304 of title 31, United States Code, for the payment of judgments, and the Federal agency shall reimburse that appropriation account out of available funds or by obtaining additional appropriations for that purpose.

(c) EFFECTIVE DATE- The amendments made by subsection (a) shall take effect at the end of the 45-day period beginning on the date of the enactment of this Act.

(d) RESTRICTION ON ACCESS TO CERTAIN INFORMATION- Section 3553(f) of title 31, United States Code, is amended--

(1) by inserting ‘(1)’ after ‘(f)’; and

(2) by adding at the end the following:

‘(2)(A) The Comptroller General may issue protective orders which establish terms, conditions, and restrictions for the provision of any document to a person under paragraph (1), that prohibit or restrict the disclosure by the person of information described in subparagraph (C) that is contained in such a document.

‘(B) The penalties specified under section 27(i) of the Office of Federal Procurement Policy Act shall apply to the disclosure of information described in subparagraph (C) in violation of a term, condition, or restriction in a protective order under this paragraph by a person that is subject to the protective order.

‘(C) Information referred to in subparagraphs (A) and (B) is procurement sensitive information, trade secrets, or other proprietary or confidential research, development, or commercial information.

‘(D) A protective order under this paragraph shall not be considered to authorize the withholding of any document or information from the Congress or an executive agency.’.

SEC. 502. POST-AWARD DEBRIEFINGS.

(a) AMENDMENT TO OFFICE OF FEDERAL PROCUREMENT POLICY ACT- The Office of Federal Procurement Policy Act (41 U.S.C. et seq.) is amended by adding at the end the following new section:

‘SEC. 29. POST-AWARD DEBRIEFINGS.

‘(a) DEBRIEFING GUIDELINES- The Federal Acquisition Regulation shall be revised to include guidelines for the debriefing of unsuccessful offerors for any contract for an amount in excess of the small purchase threshold which was awarded on a basis other than price alone. Such guidelines shall require that such a debriefing--

‘(1) shall occur if a written request by an unsuccessful offeror for a contract is submitted within 5 days after the date of the award of the contract;

‘(2) shall be completed within 5 days after the date of the submission of such a request; and

‘(3) to the maximum extent practicable, shall include at least the following:

‘(A) A detailed review of the offeror’s proposal in relation to the evaluation factors and subfactors specified in the solicitation for the contract, including identification of any weaknesses and strengths of the proposal, results of any past performance analyses, and cost realism assessment.

‘(B) A description of the rationale for the award of the contract.

‘(C) The overall evaluated cost and combined technical and cost scores of the awardee and the debriefed offeror, and the technical point scores of the awardee and the debriefed offeror.

‘(D) The overall ranking of all offerors.

‘(b) INFORMATION NOT PROVIDED- A debriefing under subsection (a) shall not make point-by-point comparisons with other offerors’ proposals and shall not disclose any information that is not subject to disclosure under section 552 of title 5, United States Code, including information relating to--

‘(1) trade secrets;

‘(2) privileged or confidential manufacturing processes and techniques; and

‘(3) commercial and financial information that is privileged or confidential, including cost breakdowns, profit, indirect cost rates, and similar information.

‘(c) NOTIFICATION OF DISCLOSURE- Each solicitation for contracts subject to subsection (a) shall notify participating offerors that the categories of information described in subsection (a)(3) may be disclosed by the Government in post-award debriefings.’.

(b) PERIOD FOR FILING PROTEST-

(1) IN GENERAL- Section 3553(d) of title 31, United States Code, is amended by adding at the end the following:

‘(3)(A) In the case of protest submitted by a person provided a debriefing with respect to a contract, paragraph (1) shall be applied by substituting for ‘but within 10 days of the date of the contract award’ the following: ‘but before the later of the date that is 10 days after the date of the contract award or the date that is 3 working days after the date of completion of a debriefing regarding the contract’.

‘(B) In this paragraph the term ‘debriefing’ means a debriefing under the guidelines required under section 29 of the Office of Federal Procurement Policy Act.’.

(2) BROOKS AUTOMATIC DATA PROCESSING ACT PROTESTS- Section 111(f)(3) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 749(f)(3)) is amended by adding at the end the following:

‘(C)(i) In the case of protest filed by a person provided a debriefing with respect to a contract, subparagraph (A) shall be applied by substituting for ‘but within 10 days after the contract award’ the following: ‘but before the later of the date that is 10 days after the date of the contract award or the date that is 3 working days after the date of completion of a debriefing regarding the contract’.

‘(ii) In this subparagraph the term ‘debriefing’ means a debriefing under the guidelines required under section 29 of the Office of Federal Procurement Policy Act.’.

(c) ISSUANCE OF REVISION- The Federal Acquisition Regulatory Council shall issue a final revision of the Federal Acquisition Regulation implementing section 29 of the Office of Federal Procurement Policy Act, as added by subsection (a), not later than 180 days after the date of the enactment of this Act.

(d) APPLICATION- Section 29 of the Office of Federal Procurement Policy Act, as added by subsection (a), shall apply with respect to solicitations for contracts issued after the expiration of the 180-day period beginning on the date of the enactment of this Act.

SEC. 503. USE OF SMALL PURCHASE PROCEDURES FOR PROCUREMENTS CONDUCTED THROUGH FEDERAL ACQUISITION COMPUTER NETWORK SYSTEMS; IMPLEMENTATION OF SYSTEMS.

(a) INCREASE IN SMALL PURCHASE THRESHOLD-

(1) IN GENERAL- Section 4 of the Office of Federal Procurement Policy Act (41 U.S.C. 403), as amended by section 122(a), is further amended--

(A) by striking paragraph (11) and inserting the following:

‘(11) the term ‘small purchase threshold’ means--

‘(A) $25,000, except as provided in subparagraphs (B) and (C);

‘(B) $50,000, in the case of a procurement--

‘(i) that is conducted by a procuring activity that has implemented FACNET system architectural capabilities in accordance with the requirements under section 30(f)(1)(A) and (B)(i); and

‘(ii) in which notices of solicitation for all contracting opportunities are issued through a FACNET system; or

‘(C) $100,000, in the case of a procurement--

‘(i) that is conducted by a procuring activity that has implemented FACNET system architectural capabilities in accordance with the requirements under section 30(f)(1)(A) and (B)(i), (ii), (iii), and (iv); and

‘(ii) in which--

‘(I) notices of solicitation for all contracting opportunities are issued through a FACNET system,

‘(II) responses to solicitations and requests for information may be submitted to the procuring activity through such system,

‘(III) information pursuant to those requests is available through such system,

‘(IV) orders are made through such system, and

‘(V) public notice of awards is provided through such system;

except that the dollar amount in each of subparagraphs (A), (B), and (C) shall be adjusted on October 1 of each year divisible by 5 to the equivalent amount in constant fiscal year 1993 dollars (rounded to the nearest $1,000);’

(B) by striking the period at the end of paragraph (12) and inserting ‘; and’; and

(C) by adding at the end the following new paragraph:

‘(13) the term ‘FACNET system’ means such a system developed in accordance with the FACNET system architecture established by the Administrator under section 30.’.

(2) EFFECTIVE DATE- The amendments made by paragraph (1) shall take effect on, and apply to solicitations made and orders placed on or after, the expiration of the 60-day period beginning on the date of issuance in final form of revisions to the Federal Acquisition Regulation under subsection (b).

(3) INTERIM RULE- Notwithstanding paragraphs (1) and (2), during the 5-year period beginning on the date of the issuance in final form of revisions to the Federal Acquisition Regulation under subsection (b), procuring activities shall continue to report, pursuant to section 19(d) of the Office of Federal Procurement Policy Act (41 U.S.C. 417(d)), procurement awards with a dollar value of at least $25,000, but less than $100,000, in conformity with the procedures for the reporting of a contract award in excess of $25,000 in effect on May 24, 1993.

(A) procuring activities of executive agencies comply with the requirements of section 8(a) of the Small Business Act (15 U.S.C. 637(a)) and section 2323 of title 10, United States Code, in awarding any contract with a price exceeding $25,000;

(B) the authority under part 13.106(a)(1) of the Federal Acquisition Regulation (48 C.F.R. 13.106(a)(1)), as in effect on May 19, 1993, to make purchases without securing competitive quotations does not apply to any purchases with a price exceeding $2,500; and

(C) procuring activities of executive agencies comply with the requirements of section 15(j) of the Small Business Act (15 U.S.C. 644), relating to the small business reserve, in awarding any contract with a price below the small purchase threshold.

(A) by inserting ‘(including orally or by any other means)’ after ‘intending to solicit’; and

(B) by inserting after ‘ten days’ the following: ‘before contract award (except for any procurement in which public notice of contract opportunities for the acquisition of property or services by a procuring activity of an executive agency is performed through a FACNET system)’.

(3) PARTICIPATION BY ALL RESPONSIBLE SMALL BUSINESS CONCERNS- Section 18 of the Office of Federal Procurement Policy Act (41 U.S.C. 416) is amended by adding at the end the following:

‘(e) An executive agency intending to solicit offers for a contract for which a notice of solicitation is required to be posted under subsection (a)(1)(B) shall ensure that all small business concerns are permitted to respond to solicitations for the contract within the time specified in the solicitations.’.

(c) PERFORMANCE TEST AND REPORT-

(1) PERFORMANCE TEST- The Comptroller General of the United States shall monitor and collect data on the results of the amendments made by subsection (a)(1), to ascertain the effects of the amendments on the participation of small business concerns (including small business concerns owned and controlled by socially and economically disadvantaged individuals) in procurement awards of less than $100,000 and the benefits and detriments, if any, to the buying activities of the various Executive agencies.

(2) DATA TO BE COLLECTED- Data collected under paragraph (1) shall include data regarding whether the amendments made by subsection (a)(1) have improved the acquisition process in terms of reduced paperwork, financial or other savings to the Government, and any increase in the number of contractors participating in the contracting process.

(3) PERIOD- Data shall be collected for purposes of paragraph (1) during the period beginning with the first full fiscal year quarter after the effective date of the amendments made by subsection (a)(1) and ending September 30, 1996.

(4) REPORT- By March 1, 1997, the Comptroller General of the United States shall report to the Committee on Government Operations of the House of Representatives, the Committee on Governmental Affairs of the Senate, and the Committees on Small Business of the House of Representatives and the Senate on the effects of the increase in the small purchase threshold made by the amendments made by subsection (a)(1).

(1) in paragraph (7) by striking ‘and’ after the semicolon at the end; and

(2) by redesignating paragraph (8) as paragraph (10) and inserting after paragraph (7) the following:

‘(8) developing policies, in consultation with the Administrator of the Small Business Administration, that ensure that small businesses and small businesses owned and controlled by socially and economically disadvantaged persons are provided with the maximum practicable opportunities to participate in procurements that are conducted below the small purchase threshold;

‘(9) developing policies that will promote achievement of goals for participation by small businesses and small businesses owned and controlled by socially and economically disadvantaged individuals; and’.

‘SEC. 30. ELECTRONIC INTERCHANGE OF PROCUREMENT INFORMATION.

‘(a) IN GENERAL- The Administrator, in consultation with the Office of Information and Regulatory Affairs, shall establish a program and assign a program manager for, and provide overall direction of policy and leadership in, the development, coordination, installation, operation, and completion of implementation by executive agencies, by not later than 5 years after the date of the enactment of the Federal Acquisition Improvement Act of 1993, of a Federal Acquisition Computer Network system architecture. Any system developed in accordance with this architecture shall be known as a ‘FACNET system’. The FACNET system architecture shall involve enabling technology and procurement electronic data interchange transaction sets. The enabling technology shall consist of a computer network, supporting data bases, and standard interfaces that interconnect Government automated systems to the network. The procurement electronic data interchange transaction sets shall facilitate the electronic interchange of standard procurement information between Government and industry automated acquisition systems.

‘(b) FUNCTIONS OF ADMINISTRATOR OF GENERAL SERVICES- The Administrator of General Services shall do the following:

‘(1) Provide technical support for FACNET systems by doing the following:

‘(A) Coordinate with the Administrator to facilitate the efficient and widespread implementation of various FACNET systems by executive agencies. This shall include interfacing FACNET systems to other systems, such as the Government bank card and Electronic Funds Transfer payment systems.

‘(B) Assist the Director of the National Institute of Standards and Technology in the development and application of appropriate Federal Information Processing Standards.

‘(C) Prepare a technical plan for coordinating the design, development, implementation, operation, and maintenance of the FACNET system architecture. The plan shall include roles and responsibilities, major milestones, cost estimates, and performance requirements.

‘(2) Ensure compliance with section 111 of the Federal Property and Administrative Services Act of 1949 in the implementation of FACNET systems by executive agencies, including by limiting the scope of delegations under subsection (a) of that section.

‘(3) Evaluate progress by executive agencies in implementing FACNET systems, and recommend changes in that implementation to the program manager assigned by the Administrator under subsection (a).

‘(4) Submit to the Congress, on the date that is one year after the date of the enactment of the Federal Acquisition Improvement Act of 1993 and on that date in each of the 5 years thereafter, a report on the overall progress by the executive branch of the Government and by each executive agency in implementing the FACNET system architecture.

‘(c) IMPLEMENTATION OF FACNET SYSTEMS BY EXECUTIVE AGENCIES-

‘(1) IN GENERAL- The head of each executive agency shall cooperate with the Administrator and the Administrator of General Services to implement FACNET systems for the agency.

‘(2) DESIGNATION OF AGENCY PROGRAM MANAGER-

‘(A) DESIGNATION- The head of each executive agency shall designate a program manager to implement FACNET systems for the agency and otherwise implement this section.

‘(B) FUNCTIONS- A program manger designated under this paragraph for an executive agency shall--

‘(i) report directly to the senior procurement executive designated for the agency under section 16(4);

‘(ii) be responsible for the timely and cost-effective implementation of the FACNET system architecture for the agency in a manner that is responsive to the procurement needs of the agency, national business needs, and the public’s interest in open government;

‘(iii) develop plans for phasing-in the implementation of FACNET systems for the procuring activities of the executive agency and phasing-out local network systems that perform comparable procurement functions;

‘(iv) participate in the interagency development of standard procurement electronic data interchange transaction sets; and

‘(v) in carrying out this section, comply with guidelines issued by the Administrator under this section and program directives issued by the Administrator of General Services under section 111 of the Federal Property and Administrative Services Act of 1949.

‘(d) FUNCTIONS OF NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY- The Director of the National Institute of Standards and Technology shall--

‘(1) ensure that the FACNET system architecture complies with Federal Information Processing Standards;

‘(2) issue additional standards for the FACNET system architecture as necessary; and

‘(3) establish tests to facilitate the aims of this section and support policies established by the Administrator under this section.

‘(e) FUNCTIONS OF SMALL BUSINESS ADMINISTRATION- The Administrator of the Small Business Administration shall--

‘(1) develop plans to coordinate and promote the use of FACNET systems by small businesses, that incorporate outreach efforts by the Small Business Administration, agency Offices of Small and Disadvantaged Business and Utilization, Small Business Development Centers, and other appropriate organizations; and

‘(2) inform and provide consistent and comprehensive FACNET system training for small businesses.

‘(f) FACNET SYSTEM COMPATIBILITY STANDARDS-

‘(1) IN GENERAL- The Administrator, in consultation with the Office of Information and Regulatory Affairs, the Administrator of General Services, the Administrator of the Small Business Administration, and the Director of the National Institute of Standards and Technology, shall prescribe policies for ensuring convenient and universal access to FACNET systems, and shall develop a set of system compatibility standards for each FACNET system interface and FACNET system support data base. The system compatibility standards shall specify the functional capabilities of each FACNET system interface, and the minimum set of data elements of each FACNET system support data base. The system compatibility standards shall ensure that the following FACNET system functions are satisfactorily performed by each executive agency, executive agency component, or procuring activity:

‘(A) Provision of widespread public notice of solicitations for contract opportunities issued by the agency, component, or activity and of orders to be made by the agency, component, or activity below the small purchase threshold.

‘(B) Allowing private users to electronically--

‘(i) selectively access and review solicitations issued by the agency, component, or activity;

‘(ii) respond to solicitations issued by the agency, component, or activity;

‘(iii) receive orders from the agency, component, or activity; and

‘(iv) access information on contract awards made by the agency, component, or activity.

‘(2) BINDING STANDARDS- The FACNET system interface and FACNET system support data base of each procuring activity shall comply with the system compatibility standards developed under paragraph (1), except to the extent the Administrator has waived application of such standards to the activity under paragraph (3).

‘(3) WAIVERS-

‘(A) IN GENERAL- The Administrator may, in writing, waive the application of any system compatibility standard to a procuring activity if the Administrator--

‘(i) determines that compliance with the standard by the procuring activity would adversely affect the accomplishment of the mission of the activity or cause a major adverse financial impact on the activity which is not offset by Government-wide savings; and

‘(ii) approves a plan, developed by the procuring activity, for complying with the standard by not later than 1 year after the issuance of the waiver.

‘(B) AUTHORITY NON-DELEGABLE- The authority of the Administrator to issue waivers under this paragraph may not be delegated.

‘(C) REQUEST FOR WAIVER- A waiver under this paragraph may be issued by the Administrator only after receipt of a request for the waiver submitted by the program manager designated under subsection (c)(2)(A) for the procuring activity for which the waiver is requested.

‘(D) NOTICE OF WAIVER- The Administrator shall promptly submit a notice of each waiver under this paragraph to the Committee on Government Operations of the House of Representatives and the Committee on Governmental Affairs of the Senate, and promptly publish the notice in the Federal Register.’.

(f) TECHNICAL CORRECTIONS-

(1) Section 18(d) of the Office of Federal Procurement Policy Act (41 U.S.C. 416) is amended by striking ‘(e)’ in the first sentence and inserting ‘(a)’.

(A) in subparagraph (A) in the matter following clause (ii) by striking ‘notice’ and inserting ‘notice of solicitation’; and

(B) in subparagraph (B) in the matter preceding clause (i) by striking ‘a notice of solicitation described in subsection (f)’ and inserting ‘a notice of solicitation described in subsection (b)’.

SEC. 504. TEST PROGRAM.

(a) IN GENERAL- The Administrator for Federal Procurement Policy (in this section referred to as the ‘Administrator’) may conduct a program of tests of alternative and innovative procurement procedures. To the extent consistent with this section, such program shall be conducted consistent with section 15 of the Office of Federal Procurement Policy Act (41 U.S.C. 413). No more than 6 such tests shall be conducted under this authority.

(b) DESIGNATION OF AGENCIES- Each test conducted pursuant to subsection (a) shall be limited to not more than 2 specific contracting activities in an agency designated by the Administrator. Each agency so designated shall select the contracting activities participating in the test with the approval of the Administrator and shall designate a procurement testing official who shall be responsible for the conduct and evaluation of tests within that agency.

(c) TEST REQUIREMENTS- Tests conducted under subsection (a)--

(1) shall be developed and structured by the Administrator or by the agency senior procurement executives designated pursuant to section 16(4) of the Office of Federal Procurement Policy Act, as redesignated by section 111 of this Act, in close coordination with the Administrator;

(2) shall be for a period of not greater than 4 years;

(3) shall be limited to specific programs of agencies or specific acquisitions;

(4) may not include any test with a total estimated life-cycle cost to the Government greater than $100,000,000;

(5) shall include--

(A) a test by the National Aeronautics and Space Administration of simplified procurement procedures for acquisitions with an estimated annual total obligation of funds of $500,000 or less;

(B) a test by the General Services Administration of expedited methods for procuring automatic data processing equipment commodities;

(C) a test by at least one agency of streamlined procedures for competition among interested sources participating in the tailoring of a solicitation for the purchase of commercial products; and

(D) a test of commercial item acquisition procedures in which all evaluation factors and subfactors on which a contract award will be based are disclosed in the solicitation, identifying both the absolute and relative weight for each factor and each subfactor; and

(6) shall not include any procurement the cost of which is expected to exceed $5,000,000 (including options).

(d) LIMITATION ON TOTAL VALUE OF CONTRACTS UNDER PROGRAM-

(1) LIMITATION- The Administrator shall ensure that the total amount obligated under contracts awarded pursuant to the program under this section does not exceed $600,000,000.

(2) MONITORING- The Administrator shall monitor the value of contracts awarded pursuant to the program under this section.

(3) PROHIBITION ON AWARDS IN EXCESS OF LIMIT- No contract may be awarded under the program under this section if the award of the contract would result in obligation of more than $600,000,000 under contracts under this section.

(e) PROCEDURES AUTHORIZED- Tests conducted under this section may include tests of any of the following procedures:

(1) Publication of agency needs prior to drafting of a solicitation.

(2) Screening of sources and competition among capable vendors.

(3) Issuance of draft solicitations for comment.

(4) Streamlined solicitations, with a minimized number of evaluation factors and information required from vendors, abbreviated periods for submission of offers, and page limitations on offers.

(5) Limitation of source selection factors to--

(A) cost to the Government;

(B) past experience; and

(C) quality of the contents of the offer.

(6) Evaluation of proposals by small teams of highly qualified people, limited to 30 days.

(7) Competition among sources of preevaluated products.

(8) Alternative notice and publication requirements.

(9) A process in which--

(A) the competitive process is initiated by a notice in the Commerce Business Daily synopsizing the needs of the executive agency conducting the test, in functional and performance terms, with other specifications provided for guidance only;

(C) contracting officials develop a request for proposals (including appropriate specifications and evaluation criteria) after reviewing the submittals made by interested sources and, if the officials determine necessary, after consultation with those sources; and

(D) the contract is awarded after a streamlined competition limited to all sources that timely provided product information in response to the notice or, if appropriate, to those sources determined most capable based on those qualification-based factors included in an invitation to submit information pursuant to subparagraph (B).

(f) TEST PLAN- Not later than 60 days before implementing any test program under this section, the Administrator shall--

(1) provide a detailed test plan, including lists of any regulations that are to be waived, and any written determination under subsection (f)(1)(B) to the Committee on Government Operations of the House of Representatives and the Committee on Governmental Affairs of the Senate;

(2) provide a copy of the plan to the appropriate authorizing committees of the House of Representatives and the Senate; and

(3) publish the plan in the Federal Register and provide an opportunity for public comment.

(g) WAIVER OF PROCUREMENT REGULATIONS-

(1) IN GENERAL- For purposes of a test conducted under subsection (a), the Administrator may waive--

(A) any provision of the Federal Acquisition Regulation that is not required by statute; and

(B) any provision of the Federal Acquisition Regulation that is required by a provision of law described in paragraph (2), the waiver of which the Administrator determines in writing to be necessary to conduct any test of any of the 9 procedures described in subsection (e).

(2) PROVISIONS OF LAW DESCRIBED- The provisions of law referred to in paragraph (1) are the following:

(N) Sections 8(e), (f), and (g) of the Small Business Act (15 U.S.C. 637(e), (f), and (g)).

(h) REPORTS AND REVIEWS-

(1) ADMINISTRATOR- The Administrator shall report to the Congress on the results of each test conducted under subsection (a).

(2) COMPTROLLER GENERAL- The Comptroller General of the United States shall review each test conducted under subsection (a) and report to the Congress on each test and shall report annually to the Congress on the conduct of and results of all tests conducted under subsection (a).

(i) EXPIRATION OF AUTHORITY- The authority to conduct tests under this section and to award contracts under such tests shall expire on October 1, 1997. Contracts entered prior to October 1, 1997, pursuant to a test shall remain in effect, notwithstanding the expiration of the authority to conduct the test under this section.

SEC. 505. SINGLE AUDIT UNDER BROOKS ARCHITECT-ENGINEERS ACT.

Section 904 of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 544) is amended by adding at the end the following:

‘(d) An agency may not perform any pre-award audit to evaluate proposed costs under any contract, subcontract, or modification awarded or made in accordance with this title in any case in which the contracting officer determines that the objectives of the audit reasonably can be met by accepting the results of an audit conducted by a Federal Government audit agency within the previous year.’.

SEC. 506. BUY AMERICAN REQUIREMENT FOR FEDERAL AGENCIES.

(a) APPLICABILITY OF BUY AMERICAN REQUIREMENTS- The Administrator of General Services shall ensure that the requirements of the Buy American Act apply to all procurements, consistent with international obligations, made with funds provided pursuant to the authorization contained in the amendment made by section 601.

(b) REPORTS ON PROCUREMENTS FROM FOREIGN ENTITIES- The Administrator of General Services shall submit to the Congress a report on the amount of procurements from foreign entities made in fiscal years 1994, 1995, and 1996 with funds provided pursuant to the authorization contained in the amendment made by section 601. Such report shall separately indicate the dollar value of items procured with such funds for which the Buy American Act was waived pursuant to the Trade Agreement Act of 1979 or any international agreement to which the United States is a party.

(c) PROHIBITION OF CONTRACTS WITH PERSONS FALSELY LABELING PRODUCTS AS MADE IN AMERICA- If the Administrator of General Services determines that a person has been convicted of intentionally affixing a label bearing a ‘Made in America’ inscription to any product sold in or shipped to the United States that is not made in America, the Administrator shall determine, not later than 90 days after determining that the person has been so convicted, whether the person should be debarred from contracting with the General Services Administration. If the Administrator determines that the person should not be debarred, the Administrator shall submit to the Congress a report on such determination not later than 30 days after the determination is made.

(d) DEFINITIONS- For purposes of this section--

(1) the term ‘Buy American Act’ means title III of the Act entitled ‘An Act making appropriations for the Treasury and Post Office Departments for the fiscal year ending June 30, 1934, and for other purposes’, approved March 3, 1933 (41 U.S.C. 10a et seq.); and

(2) the term ‘debar’ means to exclude, pursuant to established administrative procedures, from Government contracting and subcontracting for a specified period of time commensurate with the seriousness of the failure or offense or the inadequacy of performance.

SEC. 507. STUDY OF PARTICIPATION BY CERTAIN SMALL BUSINESSES IN FEDERAL PROCUREMENT.

(1) the degree of participation by small businesses owned and controlled by socially and economically disadvantaged individuals in procurements conducted by executive agencies, other than agencies in the Department of Defense; and

(2) the extent of compliance by those executive agencies with the goals for participation by such businesses required by Office of Federal Procurement Policy policy letter 91-1, relating to Government-wide small business and small disadvantaged business goals for procurement contracts.

(b) REPORT- Not later than 6 months after the date of the enactment of this Act, the Administrator for Federal Procurement Policy shall submit a report on the study required under subsection (a) to the Committee on Government Operations and the Committee on Small Business of the House of Representatives, and to the Committee on Governmental Affairs and the Committee on Small Business of the Senate. The report shall include recommendations to facilitate the provision of authority to executive agencies, other than agencies in the Department of Defense, to conduct procurement set asides for small businesses owned and controlled by socially and economically disadvantaged individuals, and on improved outreach programs to increase the participation by such businesses in procurements conducted by those executive agencies.

TITLE VI--PROVISIONS RELATING TO GENERAL SERVICES ADMINISTRATION

SEC. 601. AUTHORIZATION OF FUNCTIONS AND ACTIVITIES UNDER THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949.

Section 603(a) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 475) is amended to read as follows:

‘(a) There are authorized to be appropriated such sums as may be necessary to carry out the provisions of this Act for each fiscal year through the fiscal year ending on September 30, 1996, including payment in advance, when authorized by the Administrator, for library memberships in societies whose publications are available to members only, or to members at a price lower than that charged to the general public. Nothing in this subsection shall affect authorizations of appropriations or appropriations set forth elsewhere in this Act.’.

SEC. 602. REQUIREMENTS FOR APPOINTMENTS TO SENIOR POSITIONS IN GENERAL SERVICES ADMINISTRATION.

(a) IN GENERAL- Section 101 of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 751) is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection:

‘(f) A person appointed as the Deputy Administrator of General Services or as the head of a principal organizational unit of the General Services Administration shall, in addition to any other minimum qualifications, have significant previous management experience in government or the private sector in an area or areas directly related to the functions and responsibilities of the position to which that person is appointed.’.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall not apply to any person in a position affected by such amendments on the date of the enactment of this Act.

SEC. 603. TERMINATION OF REQUIREMENT.

The laws of the United States are amended to read as if section 630 of Public Law 102-393 had not been enacted.

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Federal Acquisition Improvement Act of 1994’.

SEC. 2. TABLE OF CONTENTS.

The table of contents for this Act is as follows:

Sec. 1. Short title.

Sec. 2. Table of contents.

TITLE I--CONTRACT FORMATION

Subtitle A--Competition Statutes

Part I--Armed Services Acquisitions

SUBPART A--COMPETITION REQUIREMENTS

Sec. 1001. References to Federal Acquisition Regulation.

Sec. 1002. Exclusion of particular sources.

Sec. 1003. Exception to use of competitive procedures for continued occupancy of leased space.

Sec. 8008. Department of Defense review of antitrust cases with national security implications.

Sec. 8009. Technical and clerical amendments.

TITLE IX--EFFECTIVE DATES AND REGULATIONS

Sec. 9001. Effective dates.

Sec. 9002. Regulations.

TITLE I--CONTRACT FORMATION

Subtitle A--Competition Statutes

PART I--ARMED SERVICES ACQUISITIONS

Subpart A--Competition Requirements

SEC. 1001. REFERENCES TO FEDERAL ACQUISITION REGULATION.

Section 2304 of title 10, United States Code, is amended--

(1) in subsection (a)(1)(A), by striking out ‘modifications’ and all that follows through ‘note)’ and inserting in lieu thereof ‘Federal Acquisition Regulation’; and

(2) in subsection (g)(1), by striking out ‘regulations modified’ and all that follows through ‘note)’ and inserting in lieu thereof ‘Federal Acquisition Regulation’.

SEC. 1002. EXCLUSION OF PARTICULAR SOURCES.

(a) PROHIBITION ON USE OF CLASSES OF PURCHASES OR CONTRACTS- Section 2304(b) of title 10, United States Code, is amended--

(1) by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively;

(2) by inserting after paragraph (1) the following new paragraph (2):

‘(2) The determination required of the head of an agency in paragraph (1) may not be made for a class of purchases or contracts.’; and

(3) in paragraph (4), as redesignated by paragraph (1), by striking out ‘paragraphs (1) and (2)’ and inserting in lieu thereof ‘paragraphs (1) and (3)’.

(b) ADDITIONAL JUSTIFICATION TO EXCLUDE PARTICULAR SOURCE- Section 2304(b)(1) of such title is amended--

(1) by striking out ‘or’ at the end of subparagraph (B);

(2) by striking out the period at the end of subparagraph (C) and inserting in lieu thereof ‘; or’; and

(3) by adding at the end the following new subparagraph:

‘(D) would ensure a continuous and reliable source; satisfy a critical need for health, safety, or other emergency supplies; or satisfy projected needs resulting from a history of high demand for the supply or service.’.

SEC. 1003. EXCEPTION TO USE OF COMPETITIVE PROCEDURES FOR CONTINUED OCCUPANCY OF LEASED SPACE.

Section 2304(d)(1) of title 10, United States Code, is amended--

(1) by striking out ‘and’ at the end of subparagraph (A);

(2) by striking out the period at the end of subparagraph (B) and inserting in lieu thereof ‘; and’; and

(3) by adding at the end the following new subparagraph:

‘(C) in the case of a follow-on contract to acquire leasehold interests in real property providing for the continued occupancy by Federal agencies of space in buildings, such space may be deemed to be available only from the incumbent lessor and may be acquired through procedures other than competitive procedures if a determination is made that (i) the occupant agencies have a continuing need for the space, (ii) the space meets the needs of the agencies, and (iii) the incumbent lessor is willing to continue to provide the space at a fair market price as established by the Government based on a market survey or an appraisal conducted in accordance with generally accepted real property appraisal procedures.’.

SEC. 1004. APPROVAL FOR USE OF NONCOMPETITIVE PROCEDURES.

Section 2304(f)(1)(B)(i) of title 10, United States Code, is amended by inserting before the semicolon at the end the following: ‘or by an official referred to in clause (ii), (iii), or (iv)’.

SEC. 1005. CONTRACTS FOR PROFESSIONAL AND TECHNICAL SERVICES.

(a) AMENDMENT- Section 2304(j)(4) of title 10, United States Code, is amended--

(1) by inserting ‘(A)’ after ‘(4)’; and

(2) by adding at the end the following new subparagraph:

‘(B) The Secretary of Defense may waive the limitation in subparagraph (A) to the extent the Secretary considers the use of master agreements necessary in order to further the policy set forth in section 2331(a) of this title. During any fiscal year, such a waiver may not increase the total value of task orders under master agreements of a contracting activity by more than 20 percent of the value of all contracts for advisory and assistance services awarded by that contracting activity during fiscal year 1989.’.

(b) CONFORMING REPEAL- Subsection (c) of section 2331 of title 10, United States Code, is repealed.

Subpart B--Planning, Solicitation, Evaluation, and Award

SEC. 1011. SOURCE SELECTION FACTORS.

Section 2305(a) of title 10, United States Code, is amended--

(1) in paragraph (2)--

(A) in subparagraph (A)(i), by striking out ‘nonprice-related factors)’ and inserting in lieu thereof ‘nonprice-related factors and significant subfactors)’; and

(B) in subparagraph (B)(ii), by striking out subclause (I) and inserting in lieu thereof the following:

‘(I) either a statement that the proposals are intended to be evaluated with, and award made after, discussions with the offerors, or a statement that the proposals are intended to be evaluated, and award made, without discussions with the offerors (other than discussions conducted for the purpose of minor clarification) unless discussions are determined to be necessary; and’; and

(2) by striking out paragraph (3) and inserting in lieu thereof the following:

‘(3)(A) In prescribing the evaluation factors to be included in each solicitation for competitive proposals, the head of an agency shall clearly establish the relative importance assigned to the evaluation factors and significant subfactors, including cost or price and the quality of the product or services to be provided (including technical capability, management capability, and prior experience of the offeror).

‘(B) Nothing in this paragraph prohibits an agency from--

‘(i) providing additional information in a solicitation, including numeric weights for all evaluation factors (and significant subfactors); or

‘(ii) stating in a solicitation that award will be made to the offeror that meets the solicitation’s mandatory requirements at the lowest price or cost.’.

Section 2305(a) of title 10, United States Code, as amended by section 1011, is further amended by adding at the end the following new paragraph:

‘(4) The head of an agency, in issuing a solicitation for a contract to be awarded using sealed bid procedures, may not include in such solicitation a clause providing for the evaluation of prices under the contract for options to purchase additional supplies or services under the contract unless the head of the agency has determined that there is a reasonable likelihood that the options will be exercised.’.

SEC. 1013. PROMPT NOTICE OF AWARD.

(a) SEALED BID PROCEDURES- Section 2305(b) of title 10, United States Code, is amended by adding at the end of paragraph (3) the following: ‘Within 3 working days after the date of contract award, the head of the agency shall notify, in writing or by electronic means, all offerors not awarded the contract that the contract has been awarded.’.

(b) COMPETITIVE PROPOSALS PROCEDURES- Such section is further amended in the second sentence of paragraph (4)(B) by striking out ‘shall promptly notify’ and inserting in lieu thereof ‘, within 3 working days after the date of contract award, shall notify, in writing or by electronic means,’.

SEC. 1014. POST-AWARD DEBRIEFINGS.

Section 2305(b) of title 10, United States Code, is amended--

(1) by redesignating paragraph (5) as paragraph (6); and

(2) by inserting after paragraph (4) the following new paragraph (5):

‘(5)(A) When a contract is awarded by an agency on the basis of competitive proposals, an unsuccessful offeror, upon written request received by the agency within 3 working days after the date of receipt of notification of the contract award, shall be debriefed and furnished the basis for the selection decision and contract award. An employee of the agency shall debrief the offeror within, to the maximum extent practicable, 4 working days after receipt of the request by the agency.

‘(B) Such debriefing shall include, at a minimum--

‘(i) the agency’s evaluation of the significant weak or deficient factors in the offeror’s offer;

‘(ii) the overall evaluated cost of the offer of the contractor awarded the contract and the overall evaluated cost of the offer of the debriefed offeror;

‘(iii) the overall ranking of all offers and the total technical and cost scores of all offers;

‘(iv) a summary of the rationale for the award;

‘(v) in the case of an offer by the debriefed offeror that includes a commercial end item, the make and model (or equivalent description) of the item included in the offer of the contractor awarded the contract; and

‘(vi) reasonable responses to questions posed by the debriefed offeror as to whether source selection procedures set forth in the solicitation, applicable regulations, and other applicable authorities were followed by the agency.

‘(C) The debriefing shall not include point-by-point comparisons of the debriefed offeror’s offer with other offers and shall not disclose any information that is exempt from disclosure under section 552 of title 5.

‘(D) Each solicitation for competitive proposals shall include a statement that information described in subparagraph (B) may be disclosed in post-award debriefings.

‘(E) If, within one year after the date of the contract award and as a result of a successful procurement protest or otherwise, the agency seeks to fulfill the same requirement under the contract on the basis of the best and final offers considered in the awarding of that contract, the agency shall make available to offerors--

‘(i) all information provided in debriefings under this paragraph regarding the offer of the contractor awarded the contract; and

‘(ii) all comparable information with respect to the original offerors.

‘(F) The contracting officer shall include a summary of the debriefing in the contract file.’.

SEC. 1015. PROTEST FILE.

Section 2305 of title 10, United States Code, is amended by adding at the end the following new subsection:

‘(e)(1) If, in the case of a solicitation for a contract issued by, or an award or proposed award of a contract by, the head of an agency, a protest is filed pursuant to the procedures in subchapter V of chapter 35 of title 31 and an actual or prospective offeror so requests, a file of the protest shall be established by the contracting activity and reasonable access shall be provided to actual or prospective offerors.

‘(2) A file established pursuant to paragraph (1) shall contain such information as would ordinarily be releasable under section 552 of title 5 (commonly referred to as the ‘Freedom of Information Act’).

‘(3) Regulations implementing this subsection shall be consistent with the regulations regarding the preparation and submission of an agency’s protest file (the so-called ‘rule 4 file’) for protests to the General Services Board of Contract Appeals under the Contract Disputes Act of 1978 (41 U.S.C. 601 et seq.).’.

SEC. 1016. AWARD OF MULTIPLE CONTRACTS.

Section 2305 of title 10, United States Code, is amended by adding after subsection (e), as added by section 1015, the following new subsection:

‘(f) AWARD OF MULTIPLE CONTRACTS- In procuring any supply or service using competitive procedures, the head of an agency may award more than one contract for the same supply or service in any case in which the head of the agency determines that it is in the best interests of the Federal Government to award those contracts for the purpose of maintaining a continuous source for the supply or service.’.

SEC. 1017. CONSIDERATION OF CONTRACTOR PAST PERFORMANCE.

Paragraph (3) of section 2305(a) of title 10, United States Code, as amended by section 1011(2), is further amended by striking out ‘capability, and prior experience’ in subparagraph (A) and inserting in lieu thereof ‘capability, prior experience, and past performance’.

SEC. 1018. DISCOURAGEMENT OF NONSTANDARD CONTRACT CLAUSES.

Section 2305 of title 10, United States Code, is amended by adding after subsection (f), as added by section 1016, the following new subsection:

‘(g) NONSTANDARD CONTRACT CLAUSES- The Secretary of Defense shall prescribe regulations to discourage, to the maximum extent practicable, the use of a nonstandard contract clause on a repetitive basis. The regulations shall include provisions that--

‘(1) clearly define nonstandard clauses; and

‘(2) require prior approval for the use of a nonstandard clause on a repetitive basis by an official at a level of responsibility above the contracting officer.’.

Subpart C--Kinds of Contracts

SEC. 1021. REPEAL OF REQUIREMENT FOR SECRETARIAL DETERMINATION REGARDING USE OF COST TYPE OR INCENTIVE CONTRACT.

Subsection (c) of section 2306 of title 10, United States Code, is repealed.

Subpart D--Miscellaneous Provisions for the Encouragement of Competition

SEC. 1031. REPEAL OF REQUIREMENT FOR ANNUAL REPORT BY ADVOCATES FOR COMPETITION.

Subsection (c) of section 2318 of title 10, United States Code, is repealed.

(2) by striking out the period at the end of subparagraph (C) and inserting in lieu thereof ‘; or’; and

(3) by adding at the end the following new subparagraph:

‘(D) would ensure a continuous and reliable source; satisfy a critical need for health, safety, or other emergency supplies; or satisfy projected needs resulting from a history of high demand for the supply or service.’.

SEC. 1053. EXCEPTION TO USE OF COMPETITIVE PROCEDURES FOR CONTINUED OCCUPANCY OF LEASED SPACE.

(2) by striking out the period at the end of subparagraph (B) and inserting in lieu thereof ‘; and’; and

(3) by adding at the end the following new subparagraph:

‘(C) in the case of a follow-on contract to acquire leasehold interests in real property providing for the continued occupancy by Federal agencies of space in buildings, such space may be deemed to be available only from the incumbent lessor and may be acquired through procedures other than competitive procedures if a determination is made that (i) the occupant agencies have a continuing need for the space, (ii) the space meets the needs of the agencies, and (iii) the incumbent lessor is willing to continue to provide the space at a fair market price as established by the Government based on a market survey or an appraisal conducted in accordance with generally accepted real property appraisal procedures.’.

SEC. 1054. APPROVAL FOR USE OF NONCOMPETITIVE PROCEDURES.

Section 303(f)(1)(B)(i) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253(f)(1)(B)(i)) is amended by inserting before the semicolon at the end the following: ‘or by an official referred to in clause (ii), (iii), or (iv)’.

(B) by striking out ‘(including price)’ and inserting ‘(including cost or price, cost-related or price-related factors and subfactors, and noncost-related or nonprice-related factors and significant subfactors)’;

(2) in subsection (b)(1)(B), by inserting ‘and subfactors’ after ‘factors’;

(3) in subsection (b)(2)(B), by striking out clause (i) and inserting in lieu thereof the following:

‘(i) either a statement that the proposals are intended to be evaluated with, and award made after, discussions with the offerors, or a statement that the proposals are intended to be evaluated, and award made, without discussions with the offerors (other than discussions conducted for the purpose of minor clarification) unless discussions are determined to be necessary; and’; and

(4) by adding at the end the following new subsection:

‘(c)(1) In prescribing the evaluation factors to be included in each solicitation for competitive proposals, an agency head shall clearly establish the relative importance assigned to the evaluation factors and significant subfactors, including cost or price and the quality of the product or services to be provided (including technical capability, management capability, prior experience, and past performance of the offeror).

‘(2) Nothing in this subsection prohibits an agency from--

‘(A) providing additional information in a solicitation, including numeric weights for all evaluation factors (and significant subfactors); or

‘(B) stating in a solicitation that award will be made to the offeror that meets the solicitation’s mandatory requirements at the lowest price or cost.’.

(1) in subsection (a), by inserting ‘, and award a contract,’ after ‘competitive proposals’;

(2) in subsection (c), by inserting ‘in accordance with subsection (a)’ in the second sentence after ‘shall evaluate the bids’; and

(3) in subsection (d)--

(A) by striking out paragraph (1) and inserting in lieu thereof the following:

‘(1) An agency head shall evaluate competitive proposals in accordance with subsection (a) and may award a contract--

‘(A) after discussions with the offerors, provided that written or oral discussions have been conducted with all responsible offerors who submit proposals within the competitive range; or

‘(B) based on the proposals received and without discussions with the offerors (other than discussions conducted for the purpose of minor clarification), provided that, as required by section 303A(b)(2)(B)(i), the solicitation included a statement that proposals are intended to be evaluated, and award made, without discussions, unless discussions are determined to be necessary.’; and

(B) by striking out paragraphs (2) and (3) and by redesignating paragraph (4) as paragraph (2).

(c) APPLICABILITY-

(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to--

(A) solicitations for sealed bids or competitive proposals issued after the end of the 180-day period beginning on the date of the enactment of this Act; and

(B) contracts awarded pursuant to those solicitations.

(2) AUTHORITY TO APPLY AMENDMENTS EARLY- The head of an executive agency may apply the amendments made by this section to solicitations issued before the end of the period referred to in paragraph (1). The head of the executive agency shall publish in the Federal Register notice of any such earlier date of application at least 10 days before that date.

Section 303A of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253a), as amended by section 1061(a)(4), is further amended by adding at the end the following new subsection:

‘(d) An agency head, in issuing a solicitation for a contract to be awarded using sealed bid procedures, may not include in such solicitation a clause providing for the evaluation of prices under the contract for options to purchase additional supplies or services under the contract unless the agency head has determined that there is a reasonable likelihood that the options will be exercised.’.

SEC. 1063. PROMPT NOTICE OF AWARD.

(a) SEALED BID PROCEDURES- Subsection (c) of section 303B of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253b) is amended by adding at the end the following: ‘Within 3 working days after the date of contract award, the agency head shall notify, in writing or by electronic means, offerors not awarded the contract that the contract has been awarded.’.

(b) COMPETITIVE PROPOSALS PROCEDURES- Paragraph (2) of section 303B(d) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253b(d)), as redesignated by section 1061(b)(3)(B), is amended in the second sentence by striking out ‘shall promptly notify’ and inserting in lieu thereof ‘, within 3 working days after the date of contract award, shall notify, in writing or by electronic means,’.

SEC. 1064. POST-AWARD DEBRIEFINGS.

(1) by redesignating subsections (e) and (f) as subsections (f) and (g), respectively; and

(2) by inserting after subsection (d) the following new subsection (e):

‘(e)(1) When a contract is awarded by an executive agency on the basis of competitive proposals, an unsuccessful offeror, upon written request received by the executive agency within 3 working days after the date of receipt of notification of the contract award, shall be debriefed and furnished the basis for the selection decision and contract award. An employee of the executive agency shall debrief the offeror within, to the maximum extent practicable, 4 working days after receipt of the request by the executive agency.

‘(2) Such debriefing shall include, at a minimum--

‘(A) the executive agency’s evaluation of the significant weak or deficient factors in the offeror’s offer;

‘(B) the overall evaluated cost of the offer of the contractor awarded the contract and the overall evaluated cost of the offer of the debriefed offeror;

‘(C) the overall ranking of all offers and the total technical and cost scores of all offers;

‘(D) a summary of the rationale for the award;

‘(E) in the case of an offer by the debriefed offeror that includes a commercial end item, the make and model (or equivalent description) of the item included in the offer of the contractor awarded the contract; and

‘(F) reasonable responses to questions posed by the debriefed offeror as to whether source selection procedures set forth in the solicitation, applicable regulations, and other applicable authorities were followed by the executive agency.

‘(3) The debriefing shall not include point-by-point comparisons of the debriefed offeror’s offer with other offers and shall not disclose any information that is exempt from disclosure under section 552 of title 5, United States Code.

‘(4) Each solicitation for competitive proposals shall include a statement that information described in paragraph (2) may be disclosed in post-award debriefings.

‘(5) If, within one year after the date of the contract award and as a result of a successful procurement protest or otherwise, the executive agency seeks to fulfill same the requirement under the contract on the basis of a new solicitation of offers or on the basis of the best and final offers considered in the awarding of that contract, the agency head shall make available to offerors--

‘(A) all information provided in debriefings under this subsection regarding the offer of the contractor awarded the contract; and

‘(B) all comparable information with respect to the original offerors.

‘(6) The contracting officer shall include a summary of the debriefing in the contract file.’.

SEC. 1065. PROTEST FILE.

Section 303B of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253b) is amended by adding at the end the following new subsection:

‘(h)(1) If, in the case of a solicitation for a contract issued by, or an award or proposed award of a contract by, an agency head, a protest is filed pursuant to the procedures in subchapter V of chapter 35 of title 31, United States Code, and an actual or prospective offeror so requests, a file of the protest shall be established by the contracting activity and reasonable access shall be provided to actual or prospective offerors.

‘(2) A file established pursuant to paragraph (1) shall contain such information as would ordinarily be releasable under section 552 of title 5 (commonly referred to as the ‘Freedom of Information Act’).

‘(3) Regulations implementing this subsection shall be consistent with the regulations regarding the preparation and submission of an agency’s protest file (the so-called ‘rule 4 file’) for protests to the General Services Board of Contract Appeals under the Contract Disputes Act of 1978 (41 U.S.C. 601 et seq.).’.

SEC. 1066. AWARD OF MULTIPLE CONTRACTS.

Section 303B of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253b), as amended by section 1065, is further amended by adding at the end the following new subsection:

‘(i) AWARD OF MULTIPLE CONTRACTS- In procuring any supply or service using competitive procedures, an executive agency may award more than one contract for the same supply or service in any case in which the head of the agency determines that it is in the best interests of the Federal Government to award those contracts for the purpose of maintaining a continuous source for the supply or service.’.

SEC. 1067. DISCOURAGEMENT OF NONSTANDARD CONTRACT CLAUSES.

Section 303B of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253b), as amended by section 1066, is further amended by adding at the end the following new subsection:

‘(j) NONSTANDARD CONTRACT CLAUSES- The head of each executive agency shall promulgate regulations to discourage, to the maximum extent practicable, the use of a nonstandard contract clause on a repetitive basis. The regulations shall include provisions that--

‘(1) clearly define nonstandard clauses; and

‘(2) require prior approval for the use of a nonstandard clause on a repetitive basis by an official at a level of responsibility above the contracting officer.’.

Subpart C--Kinds of Contracts

SEC. 1071. REPEAL OF AGENCY HEAD DETERMINATION REGARDING USE OF COST TYPE OR INCENTIVE CONTRACT.

Section 304(b) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 254(b)) is amended by striking out the second sentence.

SEC. 1072. MULTIYEAR CONTRACTS.

Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.) is amended by inserting after section 304 the following new section:

‘SEC. 304A. MULTIYEAR CONTRACTS.

‘(a) IN GENERAL- To the extent that funds are otherwise available for obligation, the head of an agency may make multiyear contracts for the purchase of property, whenever the agency head finds--

‘(1) that the use of such a contract will result in substantial savings of the total anticipated costs of carrying out the program through annual contracts;

‘(2) that the minimum need for the property to be purchased is expected to remain substantially unchanged during the contemplated contract period in terms of production rate, procurement rate, and total quantities;

‘(3) that there is a reasonable expectation that throughout the contemplated contract period the executive agency will request funding for the contract at the level required to avoid contract cancellation;

‘(4) that there is a stable design for the property to be acquired and that the technical risks associated with such property are not excessive; and

‘(5) that the estimates of both the cost of the contract and the anticipated cost avoidance through the use of a multiyear contract are realistic.

‘(b)(1) The head of the agency shall prescribe acquisition regulations to promote the use of multiyear contracting as authorized by subsection (a) in a manner that will allow the most efficient use of multiyear contracting.

‘(2) Such regulations may provide for cancellation provisions in such multiyear contracts to the extent that such provisions are necessary and in the best interests of the United States. Such cancellation provisions may include consideration of both recurring and nonrecurring costs of the contractor associated with the production of the items to be delivered under the contract.

‘(3) Such regulations shall also provide that, to the extent practicable, the administration of this section, and of the regulations prescribed under this section, shall not be carried out in a manner to preclude or curtail the existing ability of the executive agency to--

‘(A) provide for competition in the production of items to be delivered under such a contract; or

‘(B) provide for termination of a prime contract the performance of which is deficient with respect to cost, quality, or schedule.

‘(c) Before any contract described in subsection (a) that contains a clause setting forth a cancellation ceiling in excess of $100,000,000 may be awarded, the head of the agency shall give written notification of the proposed contract and of the proposed cancellation ceiling for that contract to the Congress, and such contract may not then be awarded until the end of a period of 30 days beginning on the date of such notification.

‘(d) Contracts may be made under this section for advance procurement, if feasible and practical, in order to achieve economic-lot purchases and more efficient production rates.

‘(e) In the event funds are not made available for the continuation of a contract made under this section into a subsequent fiscal year, the contract shall be canceled or terminated, and the costs of cancellation or termination may be paid from--

‘(1) appropriations originally available for the performance of the contract concerned;

‘(2) appropriations currently available for procurement of the type of property concerned, and not otherwise obligated; or

‘(3) funds appropriated for those payments.

‘(f) This section does not apply to contracts for the purchase of property to which section 111 of this Act applies.

‘(g) For the purposes of this section, a multiyear contract is a contract for the purchase of property or services for more than one, but not more than five, program years. Such a contract may provide that performance under the contract during the second and subsequent years of the contract is contingent upon the appropriation of funds and (if it does so provide) may provide for a cancellation payment to be made to the contractor if such appropriations are not made.’.

Subtitle B--Truth in Negotiations

PART I--ARMED SERVICES ACQUISITIONS

SEC. 1201. STABILIZATION OF DOLLAR THRESHOLD OF APPLICABILITY.

(a) DOLLAR THRESHOLD STABILIZATION FOR OFFERORS FOR PRIME CONTRACTS- Paragraph (1)(A) of section 2306a(a) of title 10, United States Code, is amended--

(1) in clause (i), by striking out ‘and before January 1, 1996,’; and

(2) in clause (ii), by striking out ‘or after December 31, 1995,’.

(b) ADJUSTMENT OF DOLLAR THRESHOLD- Such section is further amended by adding at the end the following new paragraph:

‘(7) The dollar amount in each of subparagraphs (A), (B), (C), and (D) of paragraph (1) shall be adjusted on October 1 of each year divisible by 5 to the equivalent amount in constant fiscal year 1993 dollars (rounded to the nearest $1,000).’.

SEC. 1202. EXCEPTIONS TO COST OR PRICING DATA REQUIREMENTS.

(a) EXCEPTIONS- Subsection (b) of section 2306a of title 10, United States Code, is amended to read as follows:

‘(b) EXCEPTIONS- (1) This section shall not be applied to a contract or subcontract, or a modification to a contract or subcontract--

‘(A) for which the price agreed upon is based on--

‘(i) adequate price competition;

‘(ii) established catalog or market prices of commercial items or of services regularly used for other than Federal Government purposes, as the case may be, that are sold in sufficient quantities to the general public; or

‘(iii) prices set by law or regulation; or

‘(B) in an exceptional case when the head of the agency determines that the requirements of this section may be waived and states in writing the reasons for such determination.

‘(2) The Federal Acquisition Regulation (issued under section 25(c) of the Office of Federal Procurement Policy Act (41 U.S.C. 421(c)) shall provide clear standards for determining whether the exceptions provided in paragraph (1)(A) apply. In the case of the exception provided in paragraph (1)(A)(i), the regulations shall specify the criteria to be used to determine whether adequate price competition exists. In the case of the exception provided in paragraph (1)(A)(ii), the regulations shall preclude the consideration of sales to the Federal Government, including the percentage of an item’s overall sales that are made to the Federal Government, when determining whether the item has been sold in sufficient quantities to the public.’.

(b) LIMITATION ON ADDITIONAL AUTHORITY- Subsection (c) of such section is amended by adding at the end the following new sentence: ‘The head of an agency may not require such data to be submitted under this subsection for any contract or subcontract, or modification to a contract or subcontract, covered by the exceptions in subsection (b).’.

SEC. 1203. RIGHT OF UNITED STATES TO EXAMINE CONTRACTOR RECORDS.

Subsection (f) of section 2306a of title 10, United States Code, is amended to read as follows:

‘(f) RIGHT OF UNITED STATES TO EXAMINE CONTRACTOR RECORDS- For the purpose of evaluating the accuracy, completeness, and currency of cost or pricing data required to be submitted by this section, the head of an agency shall have the rights provided by section 2313(a)(2) of this title.’.

SEC. 1204. CONSISTENCY OF TIME REFERENCES.

Section 2306a of title 10, United States Code, is amended--

(1) in subparagraphs (A)(ii) and (B)(ii) of subsection (d)(4), by inserting ‘or, if applicable consistent with paragraph (1)(B), another date agreed upon between the parties’ after ‘(or price of the modification)’; and

(2) in subsection (g), by inserting ‘or, if applicable consistent with subsection (d)(1)(B), another date agreed upon between the parties’ after ‘(or the price of a contract modification)’.

SEC. 1205. REPEAL OF SUPERSEDED PROVISION.

Subsection (c) of section 803 of Public Law 101-510 (10 U.S.C. 2306a note) is repealed.

PART II--CIVILIAN AGENCY ACQUISITIONS

Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.) is further amended--

(1) in section 304, by striking out subsection (d); and

(2) by inserting after section 304A, as added by section 1072, the following new section:

‘SEC. 304B. COST OR PRICING DATA: TRUTH IN NEGOTIATIONS.

‘(a) REQUIRED COST OR PRICING DATA AND CERTIFICATION- (1) An agency head shall require offerors, contractors, and subcontractors to make cost or pricing data available as follows:

‘(A) An offeror for a prime contract under this title to be entered into using procedures other than sealed-bid procedures shall be required to submit cost or pricing data before the award of a contract if--

‘(i) in the case of a prime contract entered into after the date of the enactment of the Federal Acquisition Improvement Act of 1994, the price of the contract to the United States is expected to exceed $500,000; and

‘(ii) in the case of a prime contract entered into on or before the date of the enactment of the Federal Acquisition Improvement Act of 1994, the price of the contract to the United States is expected to exceed $100,000.

‘(B) The contractor for a prime contract under this chapter shall be required to submit cost or pricing data before the pricing of a change or modification to the contract if--

‘(i) in the case of a change or modification made to a prime contract referred to in subparagraph (A)(i), the price adjustment is expected to exceed $500,000;

‘(ii) in the case of a change or modification made to a prime contract that was entered into on or before the date of the enactment of the Federal Acquisition Improvement Act of 1994, and that has been modified pursuant to paragraph (6), the price adjustment is expected to exceed $500,000; and

‘(iii) in the case of a change or modification not covered by clause (i) or (ii), the price adjustment is expected to exceed $100,000.

‘(C) An offeror for a subcontract (at any tier) of a contract under this title shall be required to submit cost or pricing data before the award of the subcontract if the prime contractor and each higher-tier subcontractor have been required to make available cost or pricing data under this section and--

‘(i) in the case of a subcontract under a prime contract referred to in subparagraph (A)(i), the price of the subcontract is expected to exceed $500,000;

‘(ii) in the case of a subcontract entered into under a prime contract that was entered into on or before the date of the enactment of the Federal Acquisition Improvement Act of 1994, and that has been modified pursuant to paragraph (6), the price of the subcontract is expected to exceed $500,000; and

‘(iii) in the case of a subcontract not covered by clause (i) or (ii), the price of the subcontract is expected to exceed $100,000.

‘(D) The subcontractor for a subcontract covered by subparagraph (C) shall be required to submit cost or pricing data before the pricing of a change or modification to the subcontract if--

‘(i) in the case of a change or modification to a subcontract referred to in subparagraph (C)(i) or (C)(ii), the price adjustment is expected to exceed $500,000; and

‘(ii) in the case of a change or modification to a subcontract referred to in subparagraph (C)(iii), the price adjustment is expected to exceed $100,000.

‘(2) A person required, as an offeror, contractor, or subcontractor, to submit cost or pricing data under paragraph (1) (or required by the head of the contracting activity concerned to submit such data under subsection (c)) shall be required to certify that, to the best of the person’s knowledge and belief, the cost or pricing data submitted are accurate, complete, and current.

‘(3) Cost or pricing data required to be submitted under paragraph (1) (or under subsection (c)), and a certification required to be submitted under paragraph (2), shall be submitted--

‘(A) in the case of a submission by a prime contractor (or an offeror for a prime contract), to the contracting officer for the contract (or to a designated representative of the contracting officer); or

‘(B) in the case of a submission by a subcontractor (or an offeror for a subcontract), to the prime contractor.

‘(4) Except as provided under subsection (b), this section applies to contracts entered into by an agency head on behalf of a foreign government.

‘(5) For purposes of paragraph (1)(C), a contractor or subcontractor granted a waiver under subsection (b)(2) shall be considered as having been required to make available cost or pricing data under this section.

‘(6) Upon the request of a contractor that was required to submit cost or pricing data under paragraph (1) in connection with a prime contract entered into on or before the date of the enactment of the Federal Acquisition Improvement Act of 1994, the agency head that entered into such contract shall modify the contract to reflect subparagraphs (B)(ii) and (C)(ii) of paragraph (1). All such modifications shall be made without requiring consideration.

‘(7) The dollar amount in each of subparagraphs (A), (B), (C), and (D) of paragraph (1) shall be adjusted on October 1 of each year divisible by 5 to the equivalent amount in constant fiscal year 1993 dollars (rounded to the nearest $1,000).

‘(b) EXCEPTIONS- (1) This section shall not be applied to a contract or subcontract, or a modification to a contract or subcontract--

‘(A) for which the price agreed upon is based on--

‘(i) adequate price competition;

‘(ii) established catalog or market prices of commercial items or of services regularly used for other than Federal Government purposes, as the case may be, that are sold in sufficient quantities to the general public; or

‘(iii) prices set by law or regulation; or

‘(B) in an exceptional case when the head of the agency determines that the requirements of this section may be waived and states in writing the reasons for such determination.

‘(2) The Federal Acquisition Regulation (issued under section 25(c) of the Office of Federal Procurement Policy Act (41 U.S.C. 421(c)) shall provide clear standards for determining whether the exceptions provided in paragraph (1)(A) apply. In the case of the exception provided in paragraph (1)(A)(i), the regulations shall specify the criteria to be used to determine whether adequate price competition exists. In the case of the exception provided in paragraph (1)(A)(ii), the regulations shall preclude the consideration of sales to the Federal Government, including the percentage of an item’s overall sales that are made to the Federal Government, when determining whether the item has been sold in sufficient quantities to the public.

‘(c) AUTHORITY TO REQUIRE COST OR PRICING DATA- When cost or pricing data are not required to be submitted by subsection (a), such data may nevertheless be required to be submitted by the head of the agency if the head of the agency determines that such data are necessary for the evaluation by the agency of the reasonableness of the price of the contract or subcontract. In any case in which the head of the agency requires such data to be submitted under this subsection, the head of the agency shall document in writing the reasons for such requirement. The head of an agency may not require such data to be submitted under this subsection for any contract or subcontract, or modification to a contract or subcontract, covered by the exceptions in subsection (b).

‘(d) PRICE REDUCTIONS FOR DEFECTIVE COST OR PRICING DATA- (1)(A) A prime contract (or change or modification to a prime contract) under which a certificate under subsection (a)(2) is required shall contain a provision that the price of the contract to the United States, including profit or fee, shall be adjusted to exclude any significant amount by which it may be determined by the agency head that such price was increased because the contractor (or any subcontractor required to make available such a certificate) submitted defective cost or pricing data.

‘(B) For the purposes of this section, defective cost or pricing data are cost or pricing data which, as of the date of agreement on the price of the contract (or another date agreed upon between the parties), were inaccurate, incomplete, or noncurrent. If for purposes of the preceding sentence the parties agree upon a date other than the date of agreement on the price of the contract, the date agreed upon by the parties shall be as close to the date of agreement on the price of the contract as is practicable.

‘(2) In determining for purposes of a contract price adjustment under a contract provision required by paragraph (1) whether, and to what extent, a contract price was increased because the contractor (or a subcontractor) submitted defective cost or pricing data, it shall be a defense that the United States did not rely on the defective data submitted by the contractor or subcontractor.

‘(3) It is not a defense to an adjustment of the price of a contract under a contract provision required by paragraph (1) that--

‘(A) the price of the contract would not have been modified even if accurate, complete, and current cost or pricing data had been submitted by the contractor or subcontractor because the contractor or subcontractor--

‘(i) was the sole source of the property or services procured; or

‘(ii) otherwise was in a superior bargaining position with respect to the property or services procured;

‘(B) the contracting officer should have known that the cost and pricing data in issue were defective even though the contractor or subcontractor took no affirmative action to bring the character of the data to the attention of the contracting officer;

‘(C) the contract was based on an agreement between the contractor and the United States about the total cost of the contract and there was no agreement about the cost of each item procured under such contract; or

‘(D) the prime contractor or subcontractor did not submit a certification of cost and pricing data relating to the contract as required under subsection (a)(2).

‘(4)(A) A contractor shall be allowed to offset an amount against the amount of a contract price adjustment under a contract provision required by paragraph (1) if--

‘(i) the contractor certifies to the contracting officer (or to a designated representative of the contracting officer) that, to the best of the contractor’s knowledge and belief, the contractor is entitled to the offset; and

‘(ii) the contractor proves that the cost or pricing data were available before the date of agreement on the price of the contract (or price of the modification), or, if applicable consistent with paragraph (1)(B), another date agreed upon between the parties, and that the data were not submitted as specified in subsection (a)(3) before such date.

‘(B) A contractor shall not be allowed to offset an amount otherwise authorized to be offset under subparagraph (A) if--

‘(i) the certification under subsection (a)(2) with respect to the cost or pricing data involved was known to be false when signed; or

‘(ii) the United States proves that, had the cost or pricing data referred to in subparagraph (A)(ii) been submitted to the United States before the date of agreement on the price of the contract (or price of the modification) or, if applicable under paragraph (1)(B), another date agreed upon between the parties, the submission of such cost or pricing data would not have resulted in an increase in that price in the amount to be offset.

‘(e) INTEREST AND PENALTIES FOR CERTAIN OVERPAYMENTS- (1) If the United States makes an overpayment to a contractor under a contract with an executive agency subject to this section and the overpayment was due to the submission by the contractor of defective cost or pricing data, the contractor shall be liable to the United States--

‘(A) for interest on the amount of such overpayment, to be computed--

‘(i) for the period beginning on the date the overpayment was made to the contractor and ending on the date the contractor repays the amount of such overpayment to the United States; and

‘(ii) at the current rate prescribed by the Secretary of the Treasury under section 6621 of the Internal Revenue Code of 1986; and

‘(B) if the submission of such defective data was a knowing submission, for an additional amount equal to the amount of the overpayment.

‘(2) Any liability under this subsection of a contractor that submits cost or pricing data but refuses to submit the certification required by subsection (a)(2) with respect to the cost or pricing data shall not be affected by the refusal to submit such certification.

‘(f) RIGHT OF UNITED STATES TO EXAMINE CONTRACTOR RECORDS- For the purpose of evaluating the accuracy, completeness, and currency of cost or pricing data required to be submitted by this section, the head of an agency shall have the rights provided by section 304C(a)(2).

‘(g) COST OR PRICING DATA DEFINED- In this section, the term ‘cost or pricing data’ means all facts that, as of the date of agreement on the price of a contract (or the price of a contract modification) or, if applicable consistent with subsection (d)(1)(B), another date agreed upon between the parties, a prudent buyer or seller would reasonably expect to affect price negotiations significantly. Such terms does not include information that is judgmental, but does include the factual information from which a judgment was derived.’.

‘(a) An executive agency, in carrying out basic, applied, and advanced research projects, may enter into cooperative agreements and other transactions with any person, any agency or instrumentality of the United States, any unit of State or local government, any educational institution, and any other entity.

‘(b)(1) Cooperative agreements and other transactions entered into under subsection (a) may include a clause that requires a person or other entity to make payments to any department or agency of the Federal Government as a condition of receiving support under the agreement or other transaction.

‘(2) The amount of any payment received by the Federal Government pursuant to a requirement imposed under paragraph (1) may be credited, to the extent authorized by an agency head, to the appropriate account established under subsection (c). Amounts so credited shall be merged with other funds in the account and shall be available for the same purposes and the same period for which other funds in such account are available.

‘(c) The authority provided under subsection (a) may be exercised without regard to section 3324 of title 31, United States Code.

‘(d) The head of the executive agency shall ensure that--

‘(1) to the maximum extent practicable, a cooperative agreement or other transaction under this section does not provide for research that duplicates research being conducted under existing programs carried out by the executive agency;

‘(2) to the extent the agency head determines practicable, the funds provided by the Government under the cooperative agreement or other transaction do not exceed the total amount provided by other parties to the cooperative agreement or other transaction; and

‘(3) the authority under this section is used only when the use of standard contracts or grants is not feasible or appropriate.

‘(e) There is hereby established on the books of the Treasury separate accounts for each executive agency for support of advanced research projects provided for in cooperative agreements and other transactions entered into under subsection (a). Funds in those accounts shall be available for the payment of such support.

‘(f) An executive agency, in carrying out research projects, may permit the director of any federally funded research and development center to enter into cooperative research and development agreements with any person, any agency or instrumentality of the United States, any unit of State or local government, and any other entity under the authority granted by section 11 of the Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C. 3710a). Technology may be transferred to a non-Federal party to such an agreement consistent with the provisions of sections 10 and 11 of such Act (15 U.S.C. 3710, 3710a).’.

SEC. 1302. COMPETITION REQUIREMENT FOR AWARDS OF GRANTS AND CONTRACTS TO COLLEGES AND UNIVERSITIES.

Subsections (a) and (b) of section 2361 of title 10, United States Code, are amended by inserting ‘or nonprofit organization other than a federally funded research and development center (FFRDC)’ after ‘college or university’ each place it appears.

Subtitle D--Procurement Protests

PART I--PROTESTS TO THE COMPTROLLER GENERAL

(a) CLARIFICATION OF PERIOD FOR CERTAIN ACTION- Paragraph (3) of section 3553(c) of title 31, United States Code, is amended by striking out ‘thereafter’ and inserting in lieu thereof ‘after the making of such finding’.

(b) SUSPENSION OF PERFORMANCE- Subsection (d) of such section is amended to read as follows:

‘(d) AUTHORIZATION AND SUSPENSION OF PERFORMANCE-

‘(1) AUTHORIZATION REQUIRED- A contractor awarded a Federal agency contract may not begin performance of the contract or engage in any related activities that result in obligations being incurred by the United States until receipt of an authorization to proceed with performance of the contract from the contracting officer responsible for the award of the contract.

‘(2) PROHIBITION OF AUTHORIZATION UNDER CERTAIN CONDITIONS- A contracting officer may not authorize a contractor to proceed with performance of the contract if--

‘(A) a protest is likely to be filed; and

‘(B) the immediate performance of the contract is not in the best interests of the United States.

‘(3) SUSPENSION DURING PERIOD WHEN PROTEST IS PENDING- (A) If the Federal agency awarding the contract receives notice of a protest in accordance with this section during the period described in subparagraph (B)--

‘(i) the contracting officer may not authorize performance of the contract to begin while the protest is pending; and

‘(ii) if contract performance was authorized in accordance with paragraph (2) before receipt of the notice, the contracting officer shall immediately direct the contractor to cease performance under the contract and to suspend any related activities that may result in additional obligations being incurred by the United States under that contract.

‘(B) The period referred to in subparagraph (A), with respect to a contract, is the period beginning on the date on which the contract is awarded and ending on the later of--

‘(i) the date that is 8 working days after such date of contract award; or

‘(ii) in the case of a procurement with respect to which an unsuccessful offeror has requested a debriefing in accordance with section 2305(b)(5) of title 10 or section 303B(e) of the Federal Property and Administrative Services Act of 1949, as applicable, the date that is 5 working days after the date on which the Federal agency debriefs the unsuccessful offeror.

‘(C) Performance and related activities suspended pursuant to subparagraph (A)(ii) by reason of a protest may not be resumed while the protest is pending.

‘(D) The head of the contracting activity may authorize the performance of the contract (notwithstanding a protest of which the Federal agency has notice under this section)--

‘(i) upon a written finding--

‘(I) that performance of the contract is in the best interests of the United States; or

‘(II) that urgent and compelling circumstances that significantly affect interests of the United States will not permit waiting for the decision of the Comptroller General concerning the protest; and

‘(ii) after the Comptroller General is notified of that finding.’.

SEC. 1402. DECISIONS ON PROTESTS.

(a) PERIOD FOR RESOLUTION OF AMENDMENTS TO PROTESTS- Section 3554(a) of title 31, United States Code, is amended--

(1) by redesignating paragraph (3) as paragraph (4); and

(2) by inserting after paragraph (2) the following new paragraph (3):

‘(3) An amendment to a protest that adds a new ground of protest, if timely raised, should be resolved, to the maximum extent practicable, within the time limit established under paragraph (1) of this subsection for final decision of the initial protest. If an amended protest cannot be resolved within such time limit, the Comptroller General may resolve the amended protest through the express option under paragraph (2) of this subsection.’.

(b) GAO RECOMMENDATIONS ON PROTESTS-

(1) IMPLEMENTATION OF RECOMMENDATIONS- Section 3554 of title 31, United States Code, is amended--

(A) in subsection (b), by adding at the end the following new paragraph:

‘(3) If the Federal agency fails to implement fully the recommendations of the Comptroller General under this subsection with respect to a solicitation for a contract or an award or proposed award of a contract within 60 days after receiving the recommendations, the head of the contracting activity responsible for that contract shall report such failure to the Comptroller General not later than 5 working days after the end of such 60-day period.’;

(B) by striking out subsection (c) and inserting in lieu thereof the following:

‘(c)(1) If the Comptroller General determines that a solicitation for a contract or a proposed award or the award of a contract does not comply with a statute or regulation, the Comptroller General may recommend that the Federal agency conducting the procurement pay to an appropriate interested party the costs of--

‘(A) filing and pursuing the protest, including reasonable attorney’s fees and consultant and expert witness fees; and

‘(B) bid and proposal preparation.

‘(2) If the Comptroller General recommends under paragraph (1) that a Federal agency pay costs to an interested party, the Federal agency shall--

‘(A) pay the costs promptly out of funds available to or for the use of the Federal agency; or

‘(B) if the Federal agency does not make such payment, promptly report to the Comptroller General the reasons for the failure to follow the Comptroller General’s recommendation.

‘(3) If the Comptroller General recommends under paragraph (1) that a Federal agency pay costs to an interested party, the Federal agency and the interested party shall attempt to reach an agreement on the amount of the costs to be paid. If the Federal agency and the interested party are unable to agree on the amount to be paid, the Comptroller General may, upon the request of the interested party, recommend to the Federal agency the amount of the costs that the Federal agency should pay.’; and

(C) by striking out subsection (e) and inserting in lieu thereof the following:

‘(e)(1) The Comptroller General shall report promptly to the Committee on Governmental Affairs and the Committee on Appropriations of the Senate and to the Committee on Government Operations and the Committee on Appropriations of the House of Representatives any case in which a Federal agency fails to implement fully a recommendation of the Comptroller General under subsection (b) or (c). The report shall include--

‘(A) a comprehensive review of the pertinent procurement, including the circumstances of the failure of the Federal agency to implement a recommendation of the Comptroller General; and

‘(B) a recommendation regarding whether, in order to correct an inequity or to preserve the integrity of the procurement process, the Congress should consider--

‘(i) private relief legislation;

‘(ii) further investigation by the Congress; or

‘(iii) other action.

‘(2) Not later than January 31 of each year, the Comptroller General shall transmit to the Congress a report containing a summary of each instance in which a Federal agency did not fully implement a recommendation of the Comptroller General under subsection (b) or (c) during the preceding year. The report shall also describe each instance in which a final decision in a protest was not rendered within 125 days after the date the protest is submitted to the Comptroller General.’.

(2) REQUIREMENT FOR PAYMENT IN ACCORDANCE WITH PRIOR GAO DETERMINATIONS- Amounts to which the Comptroller General declared an interested party to be entitled under section 3554 of title 31, United States Code, as in effect immediately before the enactment of this Act, shall, if not paid or otherwise satisfied by the Federal agency concerned before the date of the enactment of this Act, be paid out of funds available to or for the use of the Federal agency.

(c) RECOVERY OF COSTS FOR FRIVOLOUS PROTESTS- Such section is further amended by adding at the end the following new subsection:

‘(f) If the Comptroller General expressly finds that a protest or a portion of a protest is frivolous or has not been brought or pursued in good faith, the Comptroller may recommend that the protester or other interested party who joins the protest be liable to the United States for payment of all or that portion of the United States costs, for which such a finding is made, of reviewing the protest, including the fees and other expenses (as defined in section 2412(d)(2)(A) of title 28) incurred by the United States in defending the protest. The Federal Acquisition Regulation shall provide guidance under which the head of an agency may initiate action to obtain such costs, unless (A) special circumstances would make such payment unjust, or (B) the protester obtains documents or other information for the first time, after the protest is filed with the Comptroller General, which establishes that the protest or a portion is frivolous or has not been brought in good faith and the protester then promptly withdraws the protest or portion of the protest.’.

(d) RESTRICTION ON ACCESS TO CERTAIN INFORMATION- Section 3553(f) of title 31, United States Code, is amended--

(1) by inserting ‘(1)’ after ‘(f)’; and

(2) by adding at the end the following:

‘(2)(A) The Comptroller General may issue protective orders which establish terms, conditions, and restrictions for the provision of any document to a person under paragraph (1), that prohibit or restrict the disclosure by the person of information described in subparagraph (C) that is contained in such a document.

‘(B) The penalties specified under section 27(i) of the Office of Federal Procurement Policy Act shall apply to the disclosure of information described in subparagraph (C) in violation of a term, condition, or restriction in a protective order under this paragraph by a person that is subject to the protective order.

‘(C) Information referred to in subparagraphs (A) and (B) is procurement sensitive information, trade secrets, or other proprietary or confidential research, development, or commercial information.

‘(D) A protective order under this paragraph shall not be considered to authorize the withholding of any document or information from the Congress or an executive agency.’.

SEC. 1403. REGULATIONS.

(a) COMPUTATION OF PERIODS- Section 3555 of title 31, United States Code, is amended--

(1) by redesignating subsection (b) as subsection (d); and

(2) by inserting after subsection (a) the following new subsection (b):

‘(b) The procedures shall provide that, in the computation of any period described in this subchapter--

‘(1) the day of the act, event, or default from which the designated period of time begins to run not be included; and

‘(2) the last day after such act, event, or default be included, unless--

‘(A) such last day is a Saturday, a Sunday, or a legal holiday; or

‘(B) in the case of a filing of a paper at the General Accounting Office or a Federal agency, such last day is a day on which weather or other conditions make the General Accounting Office or Federal agency inaccessible, in which event the next day that is not a Saturday, Sunday, or legal holiday shall be included.’.

(b) ELECTRONIC FILINGS AND DISSEMINATIONS- Such section, as amended by subsection (a), is further amended by inserting after subsection (b) the following new subsection:

‘(c) The Comptroller General may prescribe procedures for the electronic filing and dissemination of documents and information required under this subchapter. In prescribing such procedures, the Comptroller General shall consider the ability of all parties to achieve electronic access to such documents and records.’.

(c) REPEAL OF OBSOLETE DEADLINE- Subsection (a) of such section is amended by striking out ‘Not later than January 15, 1985, the’ and inserting in lieu thereof ‘The’.

SEC. 1431. PERIODS FOR CERTAIN ACTIONS.

(A) by redesignating clauses (i) and (ii) as subclauses (I) and (II), respectively;

(B) by inserting ‘(i)’ after ‘(B)’; and

(C) by adding at the end the following:

‘(ii) A suspension under this subparagraph shall not preclude the Federal agency concerned from continuing the procurement process up to but not including award of the contract if the Board determines such action is in the best interests of the United States.’.

(2) Paragraph (3) of such section is amended by striking out subparagraph (A) and inserting in lieu thereof the following:

‘(A)(i) If, with respect to an award of a contract, the board receives notice of a protest under this subsection within the period described in clause (ii), the board shall, at the request of an interested party, hold a hearing to determine whether the board should suspend the procurement authority of the Administrator or the Administrator’s delegation of procurement authority for the protested procurement on an interim basis until the board can decide the protest.

‘(ii) The period referred to in clause (i) is the period beginning on the date on which the contract is awarded and ending on the later of--

‘(I) the date that is 8 working days after such contract award date; or

‘(II) in the case of a procurement with respect to which an unsuccessful offeror has requested a debriefing in accordance with section 303B(e), the date that is 5 working days after the date on which the Federal agency debriefs the unsuccessful offeror.

‘(iii) The board shall hold the requested hearing within 7 working days after the date of the filing of the protest.’.

(b) RESOLUTION OF AMENDMENTS TO PROTESTS- Paragraph (4)(B) of such section is amended by adding at the end the following: ‘An amendment which adds a new ground of protest should be resolved, to the maximum extent practicable, within the time limits established for resolution of the initial protest.’.

SEC. 1432. DISMISSALS OF FRIVOLOUS PROTESTS AND RECOVERY OF COSTS.

Section 111(f)(4) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 759(f)(4)) is amended by striking out subparagraph (C) and inserting in lieu thereof the following new subparagraphs:

‘(C) The board may dismiss a protest that the board determines--

‘(i) is frivolous;

‘(ii) has been brought in bad faith; or

‘(iii) does not state on its face a valid basis for protest.

‘(D) If the board makes a determination under subparagraph (C), the board may impose appropriate sanctions. Such sanctions may include imposition of liability on the protester, or other interested party who joins the protest, for payment to the United States of all or that portion of the United States costs, for which such a finding is made, of reviewing the protest, including the fees and other expenses (as defined in section 2412(d)(2)(A) of title 28) incurred by the United States in defending the protest. The Federal Acquisition Regulation shall provide guidance under which the head of an agency may initiate action to obtain such costs, unless (i) special circumstances would make such payment unjust, or (ii) the protester obtains documents or other information for the first time, after the protest is filed with the board, which establishes that the protest or a portion is frivolous or has not been brought in good faith and the protester then promptly withdraws the protest or portion of the protest.’.

SEC. 1433. AWARD OF COSTS.

Section 111(f)(5) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 759(f)(5)) is amended by striking out subparagraph (C) and inserting in lieu thereof the following:

‘(C) Whenever the board makes such a determination, it may, in accordance with section 1304 of title 31, United States Code, further declare an appropriate prevailing party to be entitled to the cost of filing and pursuing the protest (including reasonable attorney’s fees and consultant and expert witness fees), and bid and proposal preparation.’.

SEC. 1434. DISMISSAL AGREEMENTS.

Section 111(f)(5) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 759(f)(5)), as amended by section 1434, is further amended by adding at the end the following new subparagraphs:

‘(D) Any agreement that provides for the dismissal of a protest and involves a direct or indirect expenditure of appropriated funds shall be submitted to the board and shall be made a part of the public record (subject to any protective order considered appropriate by the board) before dismissal of the protest. If a Federal agency is a party to a settlement agreement, the submission of the agreement submitted to the board shall include a memorandum, signed by the contracting officer concerned, that describes in detail the procurement, the grounds for protest, the Federal Government’s position regarding the grounds for protest, the terms of the settlement, and the agency’s position regarding the propriety of the award or proposed award of the contract at issue in the protest.

‘(E) Payment of amounts due from an agency under subparagraph (C) or under the terms of a settlement agreement under subparagraph (D) shall be made from the appropriation made by section 1304 of title 31, United States Code, for the payment of judgments. The Federal agency concerned shall reimburse that appropriation account out of funds available for the procurement.’.

‘(7)(A) The board shall adopt and issue such rules and procedures as may be necessary to the expeditious disposition of protests filed under the authority of this subsection.

‘(B) The procedures shall provide that, in the computation of any period described in this subsection--

‘(i) the day of the act, event, or default from which the designated period of time begins to run not be included; and

‘(ii) the last day after such act, event, or default be included, unless--

‘(I) such last day is a Saturday, a Sunday, or a legal holiday; or

‘(II) in the case of a filing of a paper at the board, such last day is a day on which weather or other conditions make the board or Federal agency inaccessible, in which event the next day that is not a Saturday, Sunday, or legal holiday shall be included.

‘(C) The procedures may provide for electronic filing and dissemination of documents and information required under this subsection and in so providing shall consider the ability of all parties to achieve electronic access to such documents and records.’.

Section 111 of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 759) is amended by adding at the end the following new subsection:

‘(h)(1) The Administrator shall collect and compile data regarding the procurement of automatic data processing equipment under this section. The data collected and compiled shall include, at a minimum, with regard to each procurement the following:

‘(A) The procuring agency.

‘(B) The contractor.

‘(C) The automatic data processing equipment and services procured.

‘(D) The manufacturer of the equipment procured.

‘(E) The amount of the contract, to the extent that the amount is not proprietary information.

‘(F) The type of contract used.

‘(G) The extent of competition for award.

‘(H) Compatibility restrictions.

‘(I) Significant modifications of the contract.

‘(J) Contract price, to the extent that the price is not proprietary information.

‘(2) The head of each Federal agency shall report to the Administrator in accordance with regulations issued by the Administrator all information that the Administrator determines necessary in order to satisfy the requirements in paragraph (1).

‘(3) The Administrator shall--

‘(A) carry out a systematic, periodic review of information received under this subsection; and

‘(B) use such information, as appropriate, to determine the compliance of Federal agencies with the requirements of this section.’.

Subtitle E--Policy, Definitions, and Other Matters

PART I--ARMED SERVICES ACQUISITIONS

SEC. 1501. CONGRESSIONAL DEFENSE PROCUREMENT POLICY.

Section 2301 of title 10, United States Code, is amended to read as follows:

‘Sec. 2301. Congressional defense procurement policy

‘(a) The Congress finds that in order to ensure national defense preparedness; conserve fiscal resources; enhance science and technology, research and development, and production capability; provide for continued development and preservation of an efficient and responsive defense industrial base; and ensure the financial and ethical integrity of defense procurement programs, it is in the interest of the United States that property and services be acquired for the Department of Defense in the most timely, economic, and efficient manner consistent with achieving an optimum balance among efficient processes, full and open access to the procurement system, and sound implementation of socioeconomic policies. It is therefore the policy of Congress that--

‘(1) full and open competitive procedures shall be used by the Department of Defense in accordance with the requirements of this chapter;

‘(2) to the maximum extent practicable, the Department of Defense shall acquire commercial items to meet its needs and shall require prime contractors and subcontractors, at all levels, which furnish other than commercial items, to incorporate to the maximum extent practicable commercial items as components of items being supplied to the Department;

‘(3) when commercial items and components are not available, practicable, or cost effective, the Department of Defense shall acquire, and shall require prime contractors and subcontractors to incorporate, nondevelopmental items and components to the maximum extent practicable;

‘(4) property and services for the Department of Defense may be acquired by any kind of contract, other than cost-plus-a-percentage-of-cost contracts, but including multiyear contracts, that will promote the interest of the United States and will provide for appropriate allocation of risk between the Government and the contractor with due regard to the nature of the property or services to be acquired;

‘(6) contracts for advance procurement of components, parts, and materials necessary for manufacture or for logistics support of a weapon system should, if practicable, be entered into in a manner to achieve economic-lot purchases and more efficient production rates;

‘(7) procurement protests and disputes shall be fairly and expeditiously resolved through uniform interpretation of relevant laws and regulations;

‘(8) the head of an agency shall use advance procurement planning and market research and develop contract requirements in such a manner as is necessary to obtain full and open competition with due regard to the nature of the property or services to be acquired; but may restrict competitions to suppliers of commercial items to foster accomplishment of the above objective; and

‘(9) the head of an agency shall develop and maintain an acquisition career management program to ensure a professional acquisition work force in accordance with the requirements of chapter 87 of this title.

‘(b) Further, it is the policy of Congress that procurement policies and procedures for the agencies named in section 2303 of this title shall, in accordance with the requirements of this title--

‘(1) be issued in accordance with and conform to the requirements of sections 22 and 25 of the Office of Federal Procurement Policy Act (41 U.S.C. 418b and 421);

‘(2) promote and implement the Congressional policies in subsection (a) of this section and section 2 of the Office of Federal Procurement Policy Act (41 U.S.C. 401);

‘(3) be implemented to support the requirements of such agencies in time of war or national emergency as well as in peacetime;

‘(4) promote responsiveness of the procurement system to agency needs by--

‘(A) simplifying and streamlining procurement processes; and

‘(B) providing incentives to encourage contractors to take actions and make recommendations that would reduce the costs of property or services to be acquired;

‘(5) facilitate the acquisition of commercial items and commercial components at or based on commercial market prices, without requiring contractors to change their business practices; and

‘(6) promote the acquisition and use of commercial items, commercial components, and nondevelopmental items by requiring descriptions of agency requirements, whenever practicable, in terms of functions to be performed or performance required.

‘(c) Further, it is the policy of Congress that 20 percent of the purchases and contracts entered into under this chapter should be placed with small business concerns and that 5 percent of the purchases and contracts entered into under this chapter should be placed with concerns that are small disadvantaged businesses.

‘(d) It is also the policy of Congress that qualified nonprofit agencies for the blind or severely handicapped (as defined in section 2410d(b) of this title) shall be afforded the maximum practicable opportunity to provide approved commodities and services (as defined in such section) as subcontractors and suppliers under contracts awarded by the Department of Defense.’.

‘(2) The term ‘procurement’ includes all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services and ending with contract completion and closeout.

‘(3) The term ‘procurement system’ means the integration of the procurement process, the professional development of procurement personnel, and the management structure for carrying out the procurement function.

‘(4) The term ‘standards’ means the criteria for determining the effectiveness of the procurement system by measuring the performance of the various elements of such system.’;

(5) by inserting after paragraph (5) (as so redesignated) the following new paragraphs:

‘(6) The term ‘full and open competition’, when used with respect to a procurement, means that all responsible sources are permitted to submit sealed bids or competitive proposals on the procurement.

‘(7) The term ‘responsible source’ means a prospective contractor who--

‘(A) has adequate financial resources to perform the contract or the ability to obtain such resources;

‘(B) is able to comply with the required or proposed delivery or performance schedule, taking into consideration all existing commercial and Government business commitments;

‘(C) has a satisfactory performance record;

‘(D) has a satisfactory record of integrity and business ethics;

‘(E) has the necessary organization, experience, accounting and operational controls, and technical skills, or the ability to obtain such organization, experience, controls, and skills;

‘(F) has the necessary production, construction, and technical equipment and facilities, or the ability to obtain such equipment and facilities; and

‘(G) is otherwise qualified and eligible, to receive an award under applicable laws and regulations.’; and

(6) by inserting after paragraph (9) (as so redesignated) the following new paragraphs:

‘(10) The term ‘item’, ‘item of supply’, or ‘supplies’ means any individual part, component, subassembly, assembly, or subsystem integral to a major system, and other property which may be replaced during the service life of the system, and includes spare parts and replenishment spare parts, but does not include packaging or labeling associated with shipment or identification of an ‘item’.

‘(11) The terms ‘commercial item’, ‘nondevelopmental item’, ‘component’, and ‘commercial component’ have the meanings given such terms in section 2281 of this title.’.

SEC. 1503. DELEGATION OF PROCUREMENT FUNCTIONS.

(a) CONSOLIDATION OF DELEGATION AUTHORITY- (1) Section 2311 of title 10, United States Code, is amended to read as follows:

‘Sec. 2311. Assignment and delegation of procurement functions and responsibilities

‘(a) IN GENERAL- Except to the extent expressly prohibited by another provision of law, the head of an agency may delegate, subject to his direction, to any other officer or official of that agency, any power under this chapter.

‘(b) PROCUREMENTS FOR OR WITH OTHER AGENCIES- Subject to subsection (a), to facilitate the procurement of property and services covered by this chapter by each agency named in section 2303 of this title for any other agency, and to facilitate joint procurement by those agencies--

‘(1) the head of an agency may, within his agency, delegate functions and assign responsibilities relating to procurement;

‘(2) the heads of two or more agencies may by agreement delegate procurement functions and assign procurement responsibilities from one agency to another of those agencies or to an officer or civilian employee of another of those agencies; and

‘(3) the heads of two or more agencies may create joint or combined offices to exercise procurement functions and responsibilities.

‘(c) APPROVAL OF TERMINATIONS AND REDUCTIONS OF JOINT ACQUISITION PROGRAMS- (1) The Secretary of Defense shall prescribe regulations that prohibit each military department participating in a joint acquisition program approved by the Under Secretary of Defense for Acquisition and Technology from terminating or substantially reducing its participation in such program without the approval of the Under Secretary.

‘(2) The regulations shall include the following provisions:

‘(A) A requirement that, before any such termination or substantial reduction in participation is approved, the proposed termination or reduction be reviewed by the Joint Requirements Oversight Council of the Department of Defense.

‘(B) A provision that authorizes the Under Secretary of Defense for Acquisition and Technology to require a military department whose participation in a joint acquisition program has been approved for termination or substantial reduction to continue to provide some or all of the funding necessary for the acquisition program to be continued in an efficient manner.’.

(2) The table of sections at the beginning of chapter 137 of such title is amended by striking out the item relating to section 2311 and inserting in lieu thereof the following:

‘2311. Assignment and delegation of procurement functions and responsibilities.’.

(b) CONFORMING REPEAL- (1) Section 2308 of title 10, United States Code, is repealed.

(2) The table of sections at the beginning of chapter 137 of such title is amended by striking out the item related to section 2308.

SEC. 1504. DETERMINATIONS AND DECISIONS.

Section 2310 of title 10, United States Code, is amended to read as follows:

‘Sec. 2310. Determinations and decisions

‘(a) INDIVIDUAL OR CLASS DETERMINATIONS AND DECISIONS AUTHORIZED- Determinations and decisions required to be made under this chapter by the head of an agency may be made for an individual purchase or contract or, except to the extent expressly prohibited by another provision of law, for a class of purchases or contracts. Such determinations and decisions are final.

‘(b) WRITTEN FINDINGS REQUIRED- (1) Each determination or decision under section 2306(g)(1), 2307(c), or 2313(c) of this title shall be based on a written finding by the person making the determination or decision. The finding shall set out facts and circumstances that support the determination or decision.

‘(2) Each finding referred to in paragraph (1) shall be final. The head of the agency making such finding shall maintain a copy of the finding for not less than 6 years after the date of the determination or decision.’.

SEC. 1505. RESTRICTIONS ON UNDEFINITIZED CONTRACTUAL ACTIONS

(a) CLARIFICATION OF LIMITATION- Subsection (b) of section 2326 of title 10, United States Code, is amended--

(1) in the subsection caption, by striking out ‘AND EXPENDITURE’;

(2) in paragraph (1)(B), by striking out ‘or expended’;

(3) in paragraph (2), by striking out ‘expend’ and inserting in lieu thereof ‘obligate’; and

(4) in paragraph (3)--

(A) by striking out ‘expended’ and inserting in lieu thereof ‘obligated’; and

(B) by striking out ‘expend’ and inserting in lieu thereof ‘obligate’.

(b) WAIVER AUTHORITY- Such subsection is further amended--

(1) by redesignating paragraph (4) as paragraph (5); and

(2) by inserting after paragraph (3) the following new paragraph (4):

‘(4) The head of an agency may waive the provisions of this subsection with respect to a contract of that agency if such head of an agency determines that the waiver is necessary in order to support a contingency operation.’.

(c) INAPPLICABILITY OF RESTRICTIONS TO CONTRACTS WITHIN THE SIMPLIFIED ACQUISITION THRESHOLD- Subsection (g)(1)(B) of such section is amended by striking out ‘small purchase threshold’ and inserting in lieu thereof ‘simplified acquisition threshold’.

SEC. 1506. REPEAL OF REQUIREMENT RELATING TO PRODUCTION SPECIAL TOOLING AND PRODUCTION SPECIAL TEST EQUIPMENT.

(a) REPEAL- Section 2329 of title 10, United States Code, is repealed.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 137 of such title is amended by striking out the item related to section 2329.

SEC. 1507. REGULATIONS FOR BIDS.

Section 2381(a) of title 10, United States Code, is amended by striking out ‘(a) The Secretary’ and all that follows through the end of paragraph (1) and inserting in lieu thereof the following:

‘(a) The Secretary of Defense or the Secretary of a military department may--

‘(1) prescribe regulations for the preparation, submission, and opening of bids for contracts; and’.

PART II--CIVILIAN AGENCY ACQUISITIONS

SEC. 1551. DEFINITIONS.

(a) ADDITIONAL TERMS- Section 309 of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 259) is amended by adding at the end the following new subsection:

‘(d) The terms ‘commercial item’, ‘nondevelopmental item’, ‘component’, and ‘commercial component’ have the same meanings provided such terms in section 315 of this title.’.

(2) by capitalizing the initial letter in the first word of each paragraph;

(3) by striking out the semicolon at the end of each of paragraphs (1), (2), (3), (5), (6), (7), (8), and (9) and inserting in lieu thereof a period; and

(4) in paragraphs (4) and (10), by striking out ‘; and’ at the end and inserting in lieu thereof a period.

SEC. 1552. DELEGATION OF PROCUREMENT FUNCTIONS.

Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.), as amended by section 1301, is further amended by adding at the end the following new section:

‘SEC. 312. ASSIGNMENT AND DELEGATION OF PROCUREMENT FUNCTIONS AND RESPONSIBILITIES.

‘(a) IN GENERAL- Except to the extent expressly prohibited by another provision of law, an agency head may delegate, subject to his direction, to any other officer or official of that agency, any power under this title.

‘(b) PROCUREMENTS FOR OR WITH OTHER AGENCIES- Subject to subsection (a), to facilitate the procurement of property and services covered by this title by each executive agency for any other executive agency, and to facilitate joint procurement by those executive agencies--

‘(1) an agency head may, within his executive agency, delegate functions and assign responsibilities relating to procurement;

‘(2) the heads of two or more executive agencies may by agreement delegate procurement functions and assign procurement responsibilities from one executive agency to another of those executive agencies or to an officer or civilian employee of another of those executive agencies; and

‘(3) the heads of two or more executive agencies may create joint or combined offices to exercise procurement functions and responsibilities.’.

SEC. 1553. DETERMINATIONS AND DECISIONS.

Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.), as amended by section 1552, is further amended by adding at the end the following new section:

‘SEC. 313. DETERMINATIONS AND DECISIONS.

‘(a) INDIVIDUAL OR CLASS DETERMINATIONS AND DECISIONS AUTHORIZED- Determinations and decisions required to be made under this title by an agency head may be made for an individual purchase or contract or, except to the extent expressly prohibited by another provision of law, for a class of purchases or contracts. Such determinations and decisions are final.

‘(b) WRITTEN FINDINGS REQUIRED- (1) Each determination under section 305(c) shall be based on a written finding by the person making the determination or decision. The finding shall set out facts and circumstances that support the determination or decision.

‘(2) Each finding referred to in paragraph (1) shall be final. The agency head making such finding shall maintain a copy of the finding for not less 6 years after the date of the determination or decision.’.

SEC. 1554. RESTRICTIONS ON UNDEFINITIZED CONTRACTUAL ACTIONS.

Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.), as amended by section 1553, is further amended by adding at the end the following new section:

‘SEC. 314. UNDEFINITIZED CONTRACTUAL ACTIONS: RESTRICTIONS.

‘(a) IN GENERAL- An agency head may not enter into an undefinitized contractual action unless the request to the agency head for authorization of the contractual action includes a description of the anticipated effect on requirements of the executive agency concerned if a delay is incurred for purposes of determining contractual terms, specifications, and price before performance is begun under the contractual action.

‘(b) LIMITATIONS ON OBLIGATIONS OF FUNDS- (1) A contracting officer of an executive agency may not enter into an undefinitized contractual action unless the contractual action provides for agreement upon contractual terms, specifications, and price by the earlier of--

‘(A) the end of the 180-day period beginning on the date on which the contractor submits a qualifying proposal (as defined in subsection (f)) to definitize the contractual terms, specifications, and price; or

‘(B) the date on which the amount of funds obligated under the contractual action is equal to more than 50 percent of the negotiated overall ceiling price for the contractual action.

‘(2) Except as provided in paragraph (3), the contracting officer for an undefinitized contractual action may not obligate with respect to such contractual action an amount that is equal to more than 50 percent of the negotiated overall ceiling price until the contractual terms, specifications, and price are definitized for such contractual action.

‘(3) If a contractor submits a qualifying proposal (as defined in subsection (f)) to definitize an undefinitized contractual action before an amount equal to more than 50 percent of the negotiated overall ceiling price is obligated on such action, the contracting officer for such action may not obligate with respect to such contractual action an amount that is equal to more than 75 percent of the negotiated overall ceiling price until the contractual terms, specifications, and price are definitized for such contractual action.

‘(4) This subsection does not apply to an undefinitized contractual action for the purchase of initial spares.

‘(c) INCLUSION OF NON-URGENT REQUIREMENTS- Requirements for spare parts and support equipment that are not needed on an urgent basis may not be included in an undefinitized contractual action for spare parts and support equipment that are needed on an urgent basis unless the agency head approves such inclusion as being--

‘(1) good business practice; and

‘(2) in the best interests of the United States.

‘(d) MODIFICATION OF SCOPE- The scope of an undefinitized contractual action under which performance has begun may not be modified unless the agency head approves such modification as being--

‘(1) good business practice; and

‘(2) in the best interests of the United States.

‘(e) ALLOWABLE PROFIT- An agency head shall ensure that the profit allowed on an undefinitized contractual action for which the final price is negotiated after a substantial portion of the performance required is completed reflects--

‘(1) the possible reduced cost risk of the contractor with respect to costs incurred during performance of the contract before the final price is negotiated; and

‘(2) the reduced cost risk of the contractor with respect to costs incurred during performance of the remaining portion of the contract.

‘(f) DEFINITIONS- In this section:

‘(1) The term ‘undefinitized contractual action’ means a new procurement action entered into by an agency head for which the contractual terms, specifications, or price are not agreed upon before performance is begun under the action. Such term does not include contractual actions with respect to the following:

‘(A) Purchases in an amount not in excess of the amount of the simplified acquisition threshold.

‘(B) Congressionally mandated long-lead procurement contracts.

‘(2) The term ‘qualifying proposal’ means a proposal that contains sufficient information to enable the agency head concerned to conduct complete and meaningful audits of the information contained in the proposal and of any other information that the agency head is entitled to review in connection with the contract, as determined by the contracting officer.’.

TITLE II--CONTRACT ADMINISTRATION

Subtitle A--Contract Payment

PART I--ARMED SERVICES ACQUISITIONS

SEC. 2001. CONTRACT FINANCING.

(a) REORGANIZATION OF PRINCIPAL AUTHORITY PROVISION- Section 2307 of title 10, United States Code, is amended--

(1) by striking out the section heading and inserting in lieu thereof the following:

‘Sec. 2307. Contract financing’;

(2) by inserting ‘PAYMENT AUTHORITY- ’ after ‘(a)’ in subsection (a);

(3) by inserting ‘PAYMENT AMOUNT- ’ after ‘(b)’ in subsection (b);

(4) by inserting ‘SECURITY FOR ADVANCE PAYMENTS- ’ after ‘(c)’ in subsection (c);

(5) by inserting ‘CONDITIONS FOR PROGRESS PAYMENTS- ’ after ‘(d)’ in subsection (d)’; and

(6) by striking out ‘(e)(1) In any case’ and inserting in lieu thereof ‘(g) ACTION IN CASE OF FRAUD- (1) In any case’.

(b) TERMINOLOGY CORRECTION- Such section is further amended in subsection (a)(2) by striking out ‘bid’.

(c) EFFECTIVE DATE OF LIEN RELATED TO ADVANCE PAYMENTS- Such section is further amended in subsection (c) by inserting before the period at the end of the third sentence the following: ‘and is effective immediately upon the first advancement of funds without filing, notice, or any other action by the United States’.

(d) CONDITIONS FOR PROGRESS PAYMENTS- Such section is further amended in subsection (d)--

(1) in the first sentence of paragraph (1), by striking out ‘work, which’ and all that follows through ‘accomplished’ and inserting in lieu thereof ‘work accomplished that meets standards established under the contract’; and

(2) by striking out paragraph (3) and inserting in lieu thereof the following:

‘(3) This subsection applies to a contract for an amount equal to or greater than the simplified acquisition threshold.’.

(e) CONDITIONS FOR PAYMENTS FOR COMMERCIAL ITEMS- Such section is further amended by inserting after subsection (d) the following new subsection (e):

‘(e) CONDITIONS FOR PAYMENTS FOR COMMERCIAL ITEMS- (1) Payments under subsection (a) for commercial items, as that term is defined in section 2281 of this title, may be made under such terms and conditions as the head of the agency determines are appropriate or customary in the commercial marketplace. The head of the agency shall obtain adequate security for such payments. If the security is in the form of a lien in favor of the United States, such lien is paramount to all other liens and is effective immediately upon the first payment, without filing, notice, or other action by the United States.

‘(2) Advance payments made under subsection (a) for commercial items may include payments, in a total amount of not more than 15 percent of the contract price, in advance of any performance of work under the contract.

‘(3) The conditions of subsections (c) and (d) do not apply to payments made for commercial items in accordance with this subsection.’.

(f) NAVY CONTRACTS- Such section is further amended by inserting after subsection (e) the following new subsection (f):

‘(f) CERTAIN NAVY CONTRACTS- (1) The Secretary of the Navy shall provide that the rate for progress payments on any contract awarded by the Secretary for repair, maintenance, or overhaul of a naval vessel shall be not less than--

‘(A) 95 percent, in the case of firms considered to be small businesses; and

‘(B) 90 percent, in the case of all other firms.

‘(2) The Secretary of the Navy may advance to private salvage companies such funds as the Secretary considers necessary to provide for the immediate financing of salvage operations. Advances under this paragraph shall be made on terms that the Secretary considers adequate for the protection of the United States.

‘(3) The Secretary of the Navy shall ensure that, when partial, progress, or other payments are made under a contract for construction or conversion of a naval vessel, the United States is secured by a lien upon work in progress and on property acquired for performance of the contract on account of all payments so made. The lien is paramount to all other liens.’.

(g) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 137 of title 10, United States Code, is amended by striking out the item relating to section 2307 and inserting in lieu thereof the following:

‘2307. Contract financing.’.

(h) REPEAL OF SUPERSEDED PROVISIONS-

(1) PROGRESS PAYMENTS UNDER CERTAIN NAVY CONTRACTS-

(A) REPEAL- Section 7312 of title 10, United States Code, is repealed.

(B) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 633 of such title is amended by striking out the item relating to section 7312.

(2) ADVANCEMENT OF PAYMENTS FOR NAVY SALVAGE OPERATIONS-

(A) REPEAL- Section 7364 of such title is repealed.

(B) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 637 of such title is amended by striking out the item relating to section 7364.

(3) Partial payments under navy contracts--

(A) REPEAL- Section 7521 of such title is repealed.

(B) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 645 of such title is amended by striking out the item relating to section 7521.

(4) NAVY RESEARCH CONTRACTS- Section 7522 of title 10, United States Code, is amended--

(A) by striking out subsection (b); and

(B) by redesignating subsection (c) as subsection (b).

SEC. 2002. REPEAL OF VOUCHERING PROCEDURES SECTION.

(a) REPEAL- Section 2355 of title 10, United States Code, is repealed.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 139 of such title is amended by striking out the item relating to section 2355.

PART II--CIVILIAN AGENCY ACQUISITIONS

SEC. 2051. CONTRACT FINANCING.

(1) by striking out the section heading and the section designation and inserting in lieu thereof the following:

‘SEC. 305. CONTRACT FINANCING.’;

(2) by inserting ‘PAYMENT AUTHORITY- ’ after ‘(a)’ in subsection (a);

(3) by inserting ‘PAYMENT AMOUNT- ’ after ‘(b)’ in subsection (b); and

(4) by inserting ‘SECURITY FOR ADVANCE PAYMENTS- ’ after ‘(c)’ in subsection (c).

(b) TERMINOLOGY CORRECTION- Such section is further amended in subsection (a)(2) by striking out ‘bid’.

(c) EFFECTIVE DATE OF LIEN RELATED TO ADVANCE PAYMENTS- Such section is further amended in subsection (c) by inserting before the period at the end of the third sentence the following: ‘and is effective immediately upon the first advancement of funds without filing, notice, or any other action by the United States’.

(1) IN GENERAL- Such section is further amended by adding at the end the following new subsections:

‘(d) CONDITIONS FOR PROGRESS PAYMENTS- (1) The agency head shall ensure that any payment for work in progress (including materials, labor, and other items) under a contract of an executive agency that provides for such payments is commensurate with the work accomplished that meets standards established under the contract. The contractor shall provide such information and evidence as the agency head determines necessary to permit the agency head to carry out the preceding sentence.

‘(2) The agency head shall ensure that progress payments referred to in paragraph (1) are not made for more than 80 percent of the work accomplished under the contract so long as the agency head has not made the contractual terms, specifications, and price definite.

‘(3) This subsection applies to a contract for an amount equal to or greater than the simplified acquisition threshold.

‘(e) CONDITIONS FOR PAYMENTS FOR COMMERCIAL ITEMS- (1) Payments under subsection (a) for commercial items, as that term is defined in section 315 of this title, may be made under such terms and conditions as the head of the agency determines are appropriate or customary in the commercial marketplace. The head of the agency shall obtain adequate security for such payments. If the security is in the form of a lien in favor of the United States, such lien is paramount to all other liens and is effective immediately upon the first payment, without filing, notice, or other action by the United States.

‘(2) Advance payments made under subsection (a) for commercial items may include payments, in a total amount of not more than 15 percent of the contract price, in advance of any performance of work under the contract.

‘(3) The conditions of subsections (c) and (d) do not apply to payments made for commercial items in accordance with this subsection.

‘(f) ACTION IN CASE OF FRAUD- (1) In any case in which the remedy coordination official of an executive agency finds that there is substantial evidence that the request of a contractor for advance, partial, or progress payment under a contract awarded by that executive agency is based on fraud, the remedy coordination official shall recommend that the agency head reduce or suspend further payments to such contractor.

‘(2) An agency head receiving a recommendation under paragraph (1) in the case of a contractor’s request for payment under a contract shall determine whether there is substantial evidence that the request is based on fraud. Upon making such a determination, the agency head may reduce or suspend further payments to the contractor under such contract.

‘(3) The extent of any reduction or suspension of payments by an agency head under paragraph (2) on the basis of fraud shall be reasonably commensurate with the anticipated loss to the United States resulting from the fraud.

‘(4) A written justification for each decision of the agency head whether to reduce or suspend payments under paragraph (2), and for each recommendation received by the agency head in connection with such decision, shall be prepared and be retained in the files of the executive agency.

‘(5) Each agency head shall prescribe procedures to ensure that, before the agency head decides to reduce or suspend payments in the case of a contractor under paragraph (2), the contractor is afforded notice of the proposed reduction or suspension and an opportunity to submit matters to the head of the agency in response to such proposed reduction or suspension.

‘(6) Not later than 180 days after the date on which an agency head reduces or suspends payments to a contractor under paragraph (2), the remedy coordination official of the executive agency shall--

‘(A) review the determination of fraud on which the reduction or suspension is based; and

‘(B) transmit a recommendation to the agency head whether the suspension or reduction should continue.

‘(7) Each agency head who receives recommendations made by a remedy coordination official of the executive agency to reduce or suspend payments under paragraph (2) during a fiscal year shall prepare for such year a report that contains the recommendations, the actions taken on the recommendations and the reasons for such actions, and an assessment of the effects of such actions on the Federal Government. Any such report shall be available to any Member of Congress upon request.

‘(8) An agency head may not delegate responsibilities under this subsection to any person in a position below level IV of the Executive Schedule.

‘(9) In this subsection, the term ‘remedy coordination official’, with respect to an executive agency, means the person or entity in that executive agency who coordinates within that executive agency the administration of criminal, civil, administrative, and contractual remedies resulting from investigations of fraud or corruption related to procurement activities.’.

(2) RELATIONSHIP TO PROMPT PAYMENT REQUIREMENTS- The amendments made by paragraph (1) are not intended to impair or modify procedures required by the provisions of chapter 39 of title 31, United States Code, and the regulations issued pursuant to such provisions of law, that relate to progress payment requests, as such procedures are in effect on the date of the enactment of this Act.

PART III--ACQUISITIONS GENERALLY

SEC. 2061. INTEREST PENALTY ON CONTRACT CLOSE-OUT LAG-TIME.

Section 3903(a)(1) of title 31, United States Code, is amended--

(1) by striking out ‘or’ at the end of subparagraph (A);

(2) by inserting ‘or’ after the semicolon at the end of subparagraph (B); and

(3) by adding at the end the following new subparagraph:

‘(C) in any case in which the Government delays making final payment under the contract for more than one year after the date on which the last item of property is delivered or final performance of the services is completed under the contract, the date on which such last delivery is made or service completed;’.

Subtitle B--Cost Principles

PART I--ARMED SERVICES ACQUISITIONS

SEC. 2101. ALLOWABLE CONTRACT COSTS.

(a) COMPTROLLER GENERAL EVALUATION- Subsection (l) of section 2324 of title 10, United States Code, is amended to read as follows:

‘(l) The Comptroller General shall periodically evaluate the implementation of this section by the Secretary of Defense. Such evaluation shall consider the extent to which--

‘(1) the implementation is consistent with congressional intent;

‘(2) the implementation achieves the objective of eliminating unallowable costs charged to covered contracts; and

‘(3) the implementation (as well as the provisions of this section and the regulations prescribed under this section) could be improved or strengthened.’.

(b) COVERED CONTRACT DEFINED- Subsection (m) of such section is amended to read as follows:

‘(m) In this section, the term ‘covered contract’ means a contract for an amount in excess of $500,000 that is entered into by the Department of Defense, except that such term does not include a fixed-price contract without cost incentives or any contract for the purchase of commercial items (as defined in section 2281 of this title).’.

(a) REPEAL- Section 2382 of title 10, United States Code, is repealed.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 141 of such title is amended by striking out the item relating to section 2382.

PART II--CIVILIAN AGENCY ACQUISITIONS

SEC. 2151. ALLOWABLE CONTRACT COSTS.

Section 306 of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 256) is amended to read as follows:

‘SEC. 306. ALLOWABLE COSTS.

‘(a) INDIRECT COST THAT VIOLATES A FAR COST PRINCIPLE- The head of an executive agency shall require that a covered contract provide that if the contractor submits to the executive agency a proposal for settlement of indirect costs incurred by the contractor for any period after such costs have been accrued and if that proposal includes the submission of a cost which is unallowable because the cost violates a cost principle in the Federal Acquisition Regulation (referred to in section 25(c)(1) of the Office of Federal Procurement Policy Act (41 U.S.C. 421(c)(1)) or an executive agency’s supplement to the Federal Acquisition Regulation, the cost shall be disallowed.

‘(b) PENALTY FOR VIOLATION OF COST PRINCIPLE- (1) If the agency head determines that a cost submitted by a contractor in its proposal for settlement is expressly unallowable under a cost principle referred to in subsection (a) that defines the allowability of specific selected costs, the agency head shall assess a penalty against the contractor in an amount equal to--

‘(A) the amount of the disallowed cost allocated to covered contracts for which a proposal for settlement of indirect costs has been submitted; plus

‘(B) interest (to be computed based on provisions in the Federal Acquisition Regulation) to compensate the United States for the use of any funds which a contractor has been paid in excess of the amount to which the contractor was entitled.

‘(2) If the agency head determines that a proposal for settlement of indirect costs submitted by a contractor includes a cost determined to be unallowable in the case of such contractor before the submission of such proposal, the agency head shall assess a penalty against the contractor in an amount equal to two times the amount of the disallowed cost allocated to covered contracts for which a proposal for settlement of indirect costs has been submitted.

‘(c) WAIVER OF PENALTY- The Federal Acquisition Regulation shall provide for a penalty under subsection (b) to be waived in the case of a contractor’s proposal for settlement of indirect costs when--

‘(1) the contractor withdraws the proposal before the formal initiation of an audit of the proposal by the Federal Government and resubmits a revised proposal;

‘(2) the amount of unallowable costs subject to the penalty is insignificant; or

‘(3) the contractor demonstrates, to the contracting officer’s satisfaction, that--

‘(A) it has established appropriate policies and personnel training and an internal control and review system that provide assurances that unallowable costs subject to penalties are precluded from being included in the contractor’s proposal for settlement of indirect costs; and

‘(B) the unallowable costs subject to the penalty were inadvertently incorporated into the proposal.

‘(d) APPLICABILITY OF CONTRACT DISPUTES PROCEDURE TO DISALLOWANCE OF COST AND ASSESSMENT OF PENALTY- An action of an agency head under subsection (a) or (b)--

‘(1) shall be considered a final decision for the purposes of section 6 of the Contract Disputes Act of 1978 (41 U.S.C. 605); and

‘(2) is appealable in the manner provided in section 7 of such Act.

‘(e) SPECIFIC COSTS NOT ALLOWABLE- (1) The following costs are not allowable under a covered contract:

‘(A) Costs of entertainment, including amusement, diversion, and social activities, and any costs directly associated with such costs (such as tickets to shows or sports events, meals, lodging, rentals, transportation, and gratuities).

‘(B) Costs incurred to influence (directly or indirectly) legislative action on any matter pending before Congress or a State legislature.

‘(C) Costs incurred in defense of any civil or criminal fraud proceeding or similar proceeding (including filing of any false certification) brought by the United States where the contractor is found liable or had pleaded nolo contendere to a charge of fraud or similar proceeding (including filing of a false certification).

‘(D) Payments of fines and penalties resulting from violations of, or failure to comply with, Federal, State, local, or foreign laws and regulations, except when incurred as a result of compliance with specific terms and conditions of the contract or specific written instructions from the contracting officer authorizing in advance such payments in accordance with applicable provisions of the Federal Acquisition Regulation.

‘(E) Costs of membership in any social, dining, or country club or organization.

‘(F) Costs of alcoholic beverages.

‘(G) Contributions or donations, regardless of the recipient.

‘(H) Costs of advertising designed to promote the contractor or its products.

‘(I) Costs of promotional items and memorabilia, including models, gifts, and souvenirs.

‘(J) Costs for travel by commercial aircraft which exceed the amount of the standard commercial fare.

‘(K) Costs incurred in making any payment (commonly known as a ‘golden parachute payment’) which is--

‘(i) in an amount in excess of the normal severance pay paid by the contractor to an employee upon termination of employment; and

‘(ii) is paid to the employee contingent upon, and following, a change in management control over, or ownership of, the contractor or a substantial portion of the contractor’s assets.

‘(L) Costs of commercial insurance that protects against the costs of the contractor for correction of the contractor’s own defects in materials or workmanship.

‘(M) Costs of severance pay paid by the contractor to foreign nationals employed by the contractor under a service contract performed outside the United States, to the extent that the amount of severance pay paid in any case exceeds the amount paid in the industry involved under the customary or prevailing practice for firms in that industry providing similar services in the United States, as determined under the Federal Acquisition Regulation.

‘(N) Costs of severance pay paid by the contractor to a foreign national employed by the contractor under a service contract performed in a foreign country if the termination of the employment of the foreign national is the result of the closing of, or the curtailment of activities at, a United States facility in that country at the request of the government of that country.

‘(O) Costs incurred by a contractor in connection with any criminal, civil, or administrative proceeding commenced by the United States or a State, to the extent provided in subsection (k).

‘(2)(A) Pursuant to the Federal Acquisition Regulation and subject to the availability of appropriations, the agency head, in awarding a covered contract, may waive the application of the provisions of paragraphs (1)(M) and (1)(N) to that contract if the agency head determines that--

‘(i) the application of such provisions to the contract would adversely affect the continuation of a program, project, or activity that provides significant support services for employees of the executive agency posted outside the United States;

‘(ii) the contractor has taken (or has established plans to take) appropriate actions within the contractor’s control to minimize the amount and number of incidents of the payment of severance pay by the contractor to employees under the contract who are foreign nationals; and

‘(iii) the payment of severance pay is necessary in order to comply with a law that is generally applicable to a significant number of businesses in the country in which the foreign national receiving the payment performed services under the contract or is necessary to comply with a collective bargaining agreement.

‘(B) The head of the executive agency concerned shall include in the solicitation for a covered contract a statement indicating--

‘(i) that a waiver has been granted under subparagraph (A) for the contract; or

‘(ii) whether the agency head will consider granting such a waiver, and, if the agency head will consider granting a waiver, the criteria to be used in granting the waiver.

‘(C) The agency head shall make the final determination regarding whether to grant a waiver under subparagraph (A) with respect to a covered contract before award of the contract.

‘(3) The provisions of the Federal Acquisition Regulation implementing this section may establish appropriate definitions, exclusions, limitations, and qualifications.

‘(f) REQUIRED REGULATIONS- (1) The Federal Acquisition Regulation shall contain provisions on the allowability of contractor costs. Such provisions shall define in detail and in specific terms those costs which are unallowable, in whole or in part, under covered contracts. The regulations shall, at a minimum, clarify the cost principles applicable to contractor costs of the following:

‘(A) Air shows.

‘(B) Membership in civic, community, and professional organizations.

‘(C) Recruitment.

‘(D) Employee morale and welfare.

‘(E) Actions to influence (directly or indirectly) executive branch action on regulatory and contract matters (other than costs incurred in regard to contract proposals pursuant to solicited or unsolicited bids).

‘(F) Community relations.

‘(G) Dining facilities.

‘(H) Professional and consulting services, including legal services.

‘(I) Compensation.

‘(J) Selling and marketing.

‘(K) Travel.

‘(L) Public relations.

‘(M) Hotel and meal expenses.

‘(N) Expense of corporate aircraft.

‘(O) Company-furnished automobiles.

‘(P) Advertising.

‘(2) The Federal Acquisition Regulation shall require that a contracting officer not resolve any questioned costs until the contracting officer has obtained--

‘(A) adequate documentation with respect to such costs; and

‘(B) the opinion of the executive agency’s contract auditor on the allowability of such costs.

‘(3) The Federal Acquisition Regulation shall provide that, to the maximum extent practicable, an executive agency’s contract auditor be present at any negotiation or meeting with the contractor regarding a determination of the allowability of indirect costs of the contractor.

‘(4) The Federal Acquisition Regulation shall require that all categories of costs designated in the report of an executive agency’s contract auditor as questioned with respect to a proposal for settlement be resolved in such a manner that the amount of the individual questioned costs that are paid will be reflected in the settlement.

‘(g) APPLICABILITY OF REGULATIONS TO SUBCONTRACTORS- The regulations referred to in subsections (e) and (f)(1) shall require, to the maximum extent practicable, that such regulations apply to all subcontractors of a covered contract.

‘(h) CONTRACTOR CERTIFICATION REQUIRED- (1) A proposal for settlement of indirect costs applicable to a covered contract shall include a certification by an official of the contractor that, to the best of the certifying official’s knowledge and belief, all indirect costs included in the proposal are allowable. Any such certification shall be in a form prescribed in the Federal Acquisition Regulation.

‘(2) The agency head concerned may, in an exceptional case, waive the requirement for certification under paragraph (1) in the case of any contract if the agency head--

‘(A) determines in such case that it would be in the interest of the United States to waive such certification; and

‘(B) states in writing the reasons for that determination and makes such determination available to the public.

‘(i) PENALTIES FOR SUBMISSION OF COST KNOWN AS NOT ALLOWABLE- The submission to an executive agency of a proposal for settlement of costs for any period after such costs have been accrued that includes a cost that is expressly specified by statute or regulation as being unallowable, with the knowledge that such cost is unallowable, shall be subject to the provisions of section 287 of title 18, United States Code, and section 3729 of title 31, United States Code.

‘(j) CONTRACTOR TO HAVE BURDEN OF PROOF- In a proceeding before a board of contract appeals, the United States Court of Federal Claims, or any other Federal court in which the reasonableness of indirect costs for which a contractor seeks reimbursement from the United States is in issue, the burden of proof shall be upon the contractor to establish that those costs are reasonable.

‘(k) PROCEEDING COSTS NOT ALLOWABLE- (1) Except as otherwise provided in this subsection, costs incurred by a contractor in connection with any criminal, civil, or administrative proceeding commenced by the United States or a State are not allowable as reimbursable costs under a covered contract if the proceeding (A) relates to a violation of, or failure to comply with, a Federal or State statute or regulation, and (B) results in a disposition described in paragraph (2).

‘(2) A disposition referred to in paragraph (1)(B) is any of the following:

‘(A) In the case of a criminal proceeding, a conviction (including a conviction pursuant to a plea of nolo contendere) by reason of the violation or failure referred to in paragraph (1).

‘(B) In the case of a civil or administrative proceeding involving an allegation of fraud or similar misconduct, a determination of contractor liability on the basis of the violation or failure referred to in paragraph (1).

‘(C) In the case of any civil or administrative proceeding, the imposition of a monetary penalty by reason of the violation or failure referred to in paragraph (1).

‘(D) A final decision--

‘(i) to debar or suspend the contractor,

‘(ii) to rescind or void the contract, or

‘(iii) to terminate the contract for default,

by reason of the violation or failure referred to in paragraph (1).

‘(E) A disposition of the proceeding by consent or compromise if such action could have resulted in a disposition described in subparagraph (A), (B), (C), or (D).

‘(3) In the case of a proceeding referred to in paragraph (1) that is commenced by the United States and is resolved by consent or compromise pursuant to an agreement entered into by a contractor and the United States, the costs incurred by the contractor in connection with such proceeding that are otherwise not allowable as reimbursable costs under such paragraph may be allowed to the extent specifically provided in such agreement.

‘(4) In the case of a proceeding referred to in paragraph (1) that is commenced by a State, the agency head that awarded the covered contract involved in the proceeding may allow the costs incurred by the contractor in connection with such proceeding as reimbursable costs if the agency head determines, in accordance with the Federal Acquisition Regulation, that the costs were incurred as a result of (A) a specific term or condition of the contract, or (B) specific written instructions of the agency.

‘(5)(A) Except as provided in subparagraph (C), costs incurred by a contractor in connection with a criminal, civil, or administrative proceeding commenced by the United States or a State in connection with a covered contract may be allowed as reimbursable costs under the contract if such costs are not disallowable under paragraph (1), but only to the extent provided in subparagraph (B).

‘(B)(i) The amount of the costs allowable under subparagraph (A) in any case may not exceed the amount equal to 80 percent of the amount of the costs incurred, to the extent that such costs are determined to be otherwise allowable and allocable under the Federal Acquisition Regulation.

‘(ii) Regulations issued for the purpose of clause (i) shall provide for appropriate consideration of the complexity of procurement litigation, generally accepted principles governing the award of legal fees in civil actions involving the United States as a party, and such other factors as may be appropriate.

‘(C) In the case of a proceeding referred to in subparagraph (A), contractor costs otherwise allowable as reimbursable costs under this paragraph are not allowable if (i) such proceeding involves the same contractor misconduct alleged as the basis of another criminal, civil, or administrative proceeding, and (ii) the costs of such other proceeding are not allowable under paragraph (1).

‘(6) In this subsection:

‘(A) The term ‘proceeding’ includes an investigation.

‘(B) The term ‘costs’, with respect to a proceeding--

‘(i) means all costs incurred by a contractor, whether before or after the commencement of any such proceeding; and

‘(ii) includes--

‘(I) administrative and clerical expenses;

‘(II) the cost of legal services, including legal services performed by an employee of the contractor;

‘(III) the cost of the services of accountants and consultants retained by the contractor; and

‘(IV) the pay of directors, officers, and employees of the contractor for time devoted by such directors, officers, and employees to such proceeding.

‘(C) The term ‘penalty’ does not include restitution, reimbursement, or compensatory damages.

‘(l) PERIODIC EVALUATION OF IMPLEMENTATION- (1) The Comptroller General shall periodically evaluate the implementation of this section by the heads of executive agencies. Such evaluation shall consider the extent to which--

‘(A) the implementation is consistent with congressional intent;

‘(B) the implementation achieves the objective of eliminating unallowable costs charged to covered contracts; and

‘(C) the implementation (as well as the provisions of this section and the regulations prescribed under this section) could be improved or strengthened.

‘(2) The Comptroller General shall submit to the Committees on Governmental Affairs and on Appropriations of the Senate and the Committees on Government Operation and on Appropriations of the House of Representatives a report on such evaluation not later than 180 days after publication in the Federal Register of revisions to the Federal Acquisition Regulation that make substantive changes in provisions of the Federal Acquisition Regulation pertaining to allowable costs under covered contracts.

‘(m) COVERED CONTRACT DEFINED- In this section, the term ‘covered contract’ means a contract for an amount in excess of $500,000 that is entered into by an executive agency, except that such term does not include a fixed-price contract without cost incentives or any contract for the purchase of commercial items (as defined in section 315 of this title).’.

PART III--ACQUISITIONS GENERALLY

SEC. 2161. TRAVEL EXPENSES OF GOVERNMENT CONTRACTORS.

Section 24(a) of the Office of Federal Procurement Policy Act (41 U.S.C. 420) is amended by inserting after ‘Under any contract’ the following: ‘requiring submission of cost or pricing data or the negotiation of final indirect costs’.

Subtitle C--Audit and Access to Records

PART I--ARMED SERVICES ACQUISITIONS

SEC. 2201. CONSOLIDATION AND REVISION OF AUTHORITY TO EXAMINE RECORDS OF CONTRACTORS.

(a) AUTHORITY-

(1) IN GENERAL- Section 2313 of title 10, United States Code, is amended to read as follows:

‘Sec. 2313. Examination of records of contractor

‘(a) AGENCY AUTHORITY- The head of an agency, acting through an authorized representative--

‘(1) is entitled to inspect the plant and audit the records of--

‘(A) a contractor performing a cost-reimbursement, incentive, time-and-materials, labor-hour, or price-redeterminable contract, or any combination of such contracts, made by that agency under this chapter; and

‘(B) a subcontractor performing any subcontract under such a contract or combination of contracts; and

‘(2) shall, for the purpose of evaluating the accuracy, completeness, and currency of cost or pricing data required to be submitted pursuant to section 2306a of this title with respect to a contract or subcontract, have the right to examine all records of the contractor or subcontractor related to--

‘(A) the proposal for the contract or subcontract;

‘(B) the discussions conducted on the proposal;

‘(C) pricing of the contract or subcontract; or

‘(D) performance of the contract or subcontract.

‘(b) SUBPOENA POWER- (1) The Director of the Defense Contract Audit Agency (or any successor agency) may require by subpoena the production of any records of a contractor that the Secretary of Defense is authorized to audit or examine under subsection (a).

‘(2) Any such subpoena, in the case of contumacy or refusal to obey, shall be enforceable by order of an appropriate United States district court.

‘(3) The authority provided by paragraph (1) may not be redelegated.

‘(4) The Director (or any successor official) shall submit an annual report to the Secretary of Defense on the exercise of such authority during the preceding year and the reasons why such authority was exercised in any instance. The Secretary shall forward a copy of each such report to the Committees on Armed Services of the Senate and House of Representatives.

‘(c) COMPTROLLER GENERAL AUTHORITY- (1) Except as provided in paragraph (2), each contract awarded after using procedures other than sealed bid procedures shall provide that the Comptroller General and his representatives are entitled to examine any records of the contractor, or any of its subcontractors, that directly pertain to, and involve transactions relating to, the contract or subcontract.

‘(2) Paragraph (1) does not apply to a contract or subcontract with a foreign contractor or foreign subcontractor if the head of the agency concerned determines, with the concurrence of the Comptroller General or his designee, that the application of that paragraph to the contract or subcontract would not be in the public interest. However, the concurrence of the Comptroller General or his designee is not required--

‘(A) where the contractor or subcontractor is a foreign government or agency thereof or is precluded by the laws of the country involved from making its records available for examination; and

‘(B) where the head of the agency determines, after taking into account the price and availability of the property and services from United States sources, that the public interest would be best served by not applying paragraph (1).

‘(d) AUTHORITY TO USE OTHER AGENCY AUDIT FOR PRE-AWARD AUDIT- In any case in which the head of an agency proposes to examine the records of a contractor or subcontractor related to a proposal for a contract or subcontract (as authorized by subsection (a)(2)(A)), the head of the agency may use the results of an audit conducted by a Federal Government audit agency within the previous year if the contracting officer determines that the objectives of the proposed pre-award audit reasonably can be met by the other audit.

‘(e) LIMITATION- The right of the head of an agency under subsection (a), and the right of the Comptroller General under subsection (c), with respect to a contract or subcontract shall expire three years after final payment under such contract or subcontract.

‘(f) INAPPLICABILITY TO CERTAIN CONTRACTS- This section does not apply to the following contracts:

‘(1) Contracts for utility services at rates not exceeding those established to apply uniformly to the public, plus any applicable reasonable connection charge.

‘(g) FORMS OF ORIGINAL RECORD STORAGE- Nothing in this section shall be construed to preclude a contractor from duplicating or storing original records in electronic form.

‘(h) USE OF IMAGES OF ORIGINAL RECORDS- The head of an agency shall not require a contractor or subcontractor to provide original records in an audit carried out pursuant to this section if the contractor or subcontractor provides photographic or electronic images of the original records and meets the following requirements:

‘(1) The contractor or subcontractor has established procedures to ensure that the imaging process preserves the integrity, reliability, and security of the original records.

‘(2) The contractor or subcontractor maintains an effective indexing system to permit timely and convenient access to the imaged records.

‘(3) The contractor or subcontractor retains the original records for a minimum of one year after imaging to permit periodic validation of the imaging systems.

‘(i) RECORDS DEFINED- In this section, the term ‘records’ includes books, documents, accounting procedures and practices, and other data, regardless of type and regardless of whether such items are in written form, in the form of computer data, or in any other form.’.

(2) CLERICAL AMENDMENT- The item relating to such section in the table of sections at the beginning of chapter 137 of title 10, United States Code, is amended to read as follows:

‘2313. Examination of records of contractor.’.

(b) REPEAL OF SUPERSEDED PROVISION-

(1) REPEAL- Section 2406 of title 10, United States Code, is repealed.

(2) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 141 of such title is amended by striking out the item relating to section 2406.

PART II--CIVILIAN AGENCY ACQUISITIONS

SEC. 2251. AUTHORITY TO EXAMINE RECORDS OF CONTRACTORS.

(a) AUTHORITY- Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.), as amended by section 1251(2), is further amended by inserting after section 304B the following new section:

‘SEC. 304C. EXAMINATION OF RECORDS OF CONTRACTOR.

‘(a) AGENCY AUTHORITY- The head of an executive agency, acting through an authorized representative--

‘(1) is entitled to inspect the plant and audit the records of--

‘(A) a contractor performing a cost-reimbursement, incentive, time-and-materials, labor-hour, or price-redeterminable contract, or any combination of such contracts, made by that executive agency under this title; and

‘(B) a subcontractor performing any subcontract under such a contract or combination of contracts; and

‘(2) shall, for the purpose of evaluating the accuracy, completeness, and currency of cost or pricing data required to be submitted pursuant to section 304B with respect to a contract or subcontract, have the right to examine all records of the contractor or subcontractor related to--

‘(A) the proposal for the contract or subcontract;

‘(B) the discussions conducted on the proposal;

‘(C) pricing of the contract or subcontract; or

‘(D) performance of the contract or subcontract.

‘(b) COMPTROLLER GENERAL AUTHORITY- (1) Except as provided in paragraph (2), each contract awarded after using procedures other than sealed bid procedures shall provide that the Comptroller General and his representatives are entitled to examine any records of the contractor, or any of its subcontractors, that directly pertain to, and involve transactions relating to, the contract or subcontract.

‘(2) Paragraph (1) does not apply to a contract or subcontract with a foreign contractor or foreign subcontractor if the agency head concerned determines, with the concurrence of the Comptroller General or his designee, that the application of that paragraph to the contract or subcontract would not be in the public interest. However, the concurrence of the Comptroller General or his designee is not required--

‘(A) where the contractor or subcontractor is a foreign government or agency thereof or is precluded by the laws of the country involved from making its records available for examination; and

‘(B) where the agency head determines, after taking into account the price and availability of the property and services from United States sources, that the public interest would be best served by not applying paragraph (1).

‘(c) AUTHORITY TO USE OTHER AGENCY AUDIT FOR PRE-AWARD AUDIT- In any case in which the head of an agency proposes to examine the records of a contractor or subcontractor related to a proposal for a contract or subcontract (as authorized by subsection (a)(2)(A)), the head of the agency may use the results of an audit conducted by a Federal Government audit agency within the previous year if the contracting officer determines that the objectives of the proposed pre-award audit reasonably can be met by the other audit.

‘(d) LIMITATION- The right of an agency head under subsection (a), and the right of the Comptroller General under subsection (b), with respect to a contract or subcontract shall expire three years after final payment under such contract or subcontract.

‘(e) INAPPLICABILITY TO CERTAIN CONTRACTS- This section does not apply to the following contracts:

‘(1) Contracts for utility services at rates not exceeding those established to apply uniformly to the public, plus any applicable reasonable connection charge.

‘(f) FORM OF ORIGINAL RECORD STORAGE- Nothing in this section shall be construed to preclude a contractor from duplicating or storing original records in electronic form.

‘(g) USE OF IMAGES OF ORIGINAL RECORDS- The head of an agency shall not require a contractor or subcontractor to provide original records in an audit carried out pursuant to this section if the contractor or subcontractor provides photographic or electronic images of the original records and meets the following requirements:

‘(1) The contractor or subcontractor has established procedures to ensure that the imaging process preserves the integrity, reliability, and security of the original records.

‘(2) The contractor or subcontractor maintains an effective indexing system to permit timely and convenient access to the imaged records.

‘(3) The contractor or subcontractor retains the original records for a minimum of one year after imaging to permit periodic validation of the imaging systems.

‘(h) RECORDS DEFINED- In this section, the term ‘records’ includes books, documents, accounting procedures and practices, and other data, regardless of type and regardless of whether such items are in written form, in the form of computer data, or in any other form.’.

Subtitle D--Cost Accounting Standards

Section 26(f)(3) of the Office of Federal Procurement Policy Act (41 U.S.C. 422(f)(3)) is amended in the first sentence by striking out ‘Not later than 180 days after the date of enactment of this section, the Administrator’ and inserting in lieu thereof ‘The Administrator’.

SEC. 2401. CLARIFICATION OF PROVISION RELATING TO QUALITY CONTROL OF CERTAIN SPARE PARTS.

The second sentence of subsection (a) of section 2383 of title 10, United States Code, is amended to read as follows: ‘In establishing the appropriate qualification requirements, the Secretary of Defense shall use the Department of Defense qualification requirements that were used to qualify the original production part, unless the Secretary determines in writing--

‘(1) that there are other requirements sufficiently similar to those requirements that should be used instead; or

‘(2) that any or all such requirements are unnecessary.’.

SEC. 2402. CONTRACTOR GUARANTEES REGARDING WEAPON SYSTEMS.

(a) REPEAL OF REQUIREMENT FOR REPORT ON WAIVERS- Subsection (e) of section 2403 of title 10, United States Code, is amended--

(1) by striking out ‘(1)’; and

(2) by striking out paragraph (2).

(b) PROVISIONS TO BE ADDRESSED BY REGULATIONS- Subsection (h) of such section is amended--

(1) by redesignating paragraph (2) as paragraph (3); and

(2) by inserting after paragraph (1) the following new paragraph (2):

‘(2) The regulations shall include the following:

‘(A) Guidelines for negotiating contractor guarantees that are reasonable and cost effective, as determined on the basis of the likelihood of defects and the estimated cost of correcting such defects.

‘(B) Procedures for administering contractor guarantees.

‘(C) Guidelines for determining the cases in which it may be appropriate to waive the requirements of this section.’.

Subtitle F--Claims and Disputes

SEC. 2501. CERTIFICATION OF CONTRACT CLAIMS.

(1) REPEAL- Section 2410 of title 10, United States Code, is repealed.

(2) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 141 of such title is amended by striking out the item relating to section 2410.

(b) REPEAL OF SUPERSEDED PROVISION- Section 813(b) of the National Defense Authorization Act for Fiscal Year 1993 (Public Law 102-484; 106 Stat. 2453), is repealed.

(c) RESTRICTION ON LEGISLATIVE PAYMENT OF CLAIMS- Section 2410e of title 10, United States Code, is amended by adding at the end the following new subsection:

‘(d) RESTRICTION ON LEGISLATIVE PAYMENT OF CLAIMS- In the case of a contract of an agency named in section 2303(a) of this title, no provision of a law enacted after the date of the enactment of the Federal Acquisition Improvement Act of 1994 that directs the payment of a particular claim under such contract, a particular request for equitable adjustment to any term of such contract, or a particular request for relief under Public Law 85-804 (50 U.S.C. 1431 et seq.) regarding such contract may be implemented unless such provision of law--

‘(1) specifically refers to this subsection; and

‘(2) specifically states that this subsection does not apply with respect to the payment directed by that provision of law.’.

TITLE III--MAJOR SYSTEMS AND SERVICE SPECIFIC STATUTES

Subtitle A--Major Systems Statutes

SEC. 3001. WEAPON DEVELOPMENT AND PROCUREMENT SCHEDULES.

(a) DEADLINE AND PURPOSE- Subsection (a) of section 2431 of title 10, United States Code, is amended--

(1) in the first sentence--

(A) by striking out ‘at the same time’ and inserting in lieu thereof ‘not later than 45 days after’; and

(B) by striking out ‘a written report’ and inserting in lieu thereof ‘budget justification documents’; and

(2) in the second and third sentences, by striking out ‘report’ and inserting in lieu thereof ‘documents’.

(b) ADDITIONAL MATTERS TO BE INCLUDED- Subsection (b) of such section is amended--

(1) by striking out ‘include--’ and inserting in lieu thereof ‘include each of the following:’;

(2) by capitalizing the first word in each of paragraphs (1), (2), and (3);

(3) by striking out the semicolon at the end of paragraphs (1) and (2) and inserting in lieu thereof a period;

(4) by striking out ‘; and’ at the end of paragraph (3) and inserting in lieu thereof a period; and

(5) by amending paragraph (4) to read as follows:

‘(4)(A) The most efficient production rate, the most efficient acquisition rate, and the minimum sustaining rate, consistent with the program priority established for such weapon system by the Secretary concerned.

‘(B) In this paragraph:

‘(i) The term ‘most efficient production rate’ means the maximum rate for each budget year at which the weapon system can be produced with existing or planned plant capacity and tooling, with one shift a day running for eight hours a day and five days a week.

‘(ii) The term ‘minimum sustaining rate’ means the production rate for each budget year that is necessary to keep production lines open while maintaining a base of responsive vendors and suppliers.’.

SEC. 3002. SELECTED ACQUISITION REPORT REQUIREMENT.

(a) DEFINITION OF PROCUREMENT UNIT COST-

(1) DEFINITION- Paragraph (2) of section 2432(a) of title 10, United States Code, is amended--

(A) in clause (A), by striking out ‘for a fiscal year’ and all that follows through ‘such program in such fiscal year’;

(B) in clause (B), by striking out ‘with such funds during such fiscal year.’ and inserting in lieu thereof a period; and

(C) by striking out the last sentence.

(2) CONFORMING AMENDMENTS- Section 2433 of such title is amended--

(A) in subparagraph (B) of subsection (c)(1), by striking out ‘current’ before ‘procurement unit cost’;

(B) in subsection (d), by striking out ‘current’ before ‘procurement unit cost’ each place it appears; and

(C) in subsection (e), by striking out ‘current’ before ‘procurement unit cost’ both places it appears.

(b) EXCLUSION OF FIRM, FIXED-PRICE CONTRACTS- Subsection (a) of section 2432 of such title is amended in paragraph (3) by inserting before the period at the end the following: ‘and that is not a firm, fixed price contract’.

(c) DEFINITION OF FULL LIFE-CYCLE COST- Such subsection is further amended in paragraph (4) by striking out ‘has the meaning’ and all that follows through the end of the paragraph and inserting in lieu thereof the following: ‘means all costs of development, procurement, military construction, and operations and support, without regard to funding source or management control.’.

(d) NOTICE OF PROPOSED CHANGES IN SAR- Subsection (c) of such section is amended in paragraph (2) by striking out the second sentence and inserting in lieu thereof the following: ‘Whenever the Secretary of Defense proposes to make changes in the content of a Selected Acquisition Report, the Secretary shall submit a notice of the proposed changes to such committees. The changes shall be considered approved by the Secretary, and may be incorporated into the report, only after the end of the 60-day period beginning on the date on which the notice is received by those committees.’.

(e) ELIMINATION OF CERTAIN SAR REQUIREMENTS- Such subsection is further amended in paragraph (3) by striking out subparagraph (C).

(f) UNIFORM IMPLEMENTATION OF LIFE-CYCLE COST ANALYSIS- Such subsection is further amended--

(1) by striking out paragraph (5); and

(2) by adding at the end of subparagraph (A) of paragraph (3) the following: ‘The Secretary of Defense shall ensure that this subparagraph is implemented in a uniform manner, to the extent practicable, throughout the Department of Defense.’.

(g) DEADLINE REVISION- Subsection (f) of such section is amended by striking out ‘60 days’ in the first sentence and inserting in lieu thereof ‘45 days’.

(h) ELIMINATION OF PRELIMINARY REPORT- Such subsection is further amended by striking out the second sentence.

(i) TERMINOLOGY CORRECTIONS- Such section is further amended as follows:

(1) Subsection (b)(3)(A) is amended by striking out ‘full scale development or’ in clause (i).

(2) Subsection (c)(3) is amended by striking out ‘full-scale engineering’ in subparagraph (A) and inserting in lieu thereof ‘engineering and manufacturing’.

(3) Subsection (h)(1) is amended by striking out ‘full-scale engineering’ both places it appears and inserting in lieu thereof ‘engineering and manufacturing’.

SEC. 3003. UNIT COST REPORT REQUIREMENT.

(a) REVISION OF BASELINE REPORT DEFINITIONS-

(1) REVISION- Section 2433(a) of title 10, United States Code, is amended--

(A) in paragraph (2)--

(i) by striking out ‘Baseline Selected Acquisition Report’ and inserting in lieu thereof ‘Baseline Estimate’; and

(ii) by striking out ‘Selected Acquisition Report in which’ and all that follows through the end of the paragraph and inserting in lieu thereof ‘cost estimate included in the baseline description for the program under section 2435 of this title.’; and

(B) by striking out paragraph (4).

(2) CONFORMING AMENDMENTS- Section 2433 of such title is further amended--

(A) in subsection (c)(1), by striking out ‘Baseline Report’ in subparagraphs (A) and (B) and inserting in lieu thereof ‘Baseline Estimate’; and

(B) in subsection (d), by striking out ‘Baseline Report’ in paragraphs (1) and (2) and inserting in lieu thereof ‘Baseline Estimate’.

(b) CONTENTS OF UNIT COST REPORT- Section 2433(b) of such title is amended in paragraph (3) by striking out ‘Baseline Report was submitted.’ and inserting in lieu thereof ‘contract was entered into.’.

(c) ELIMINATION OF CERTAIN UNIT COST REPORT REQUIREMENT- Section 2433(c) of such title, as amended by subsection (a), is further amended--

(d) CONSTANT BASE YEAR DOLLARS- Section 2433(f) of such title is amended by striking out ‘include expected inflation’ and inserting in lieu thereof ‘be stated in terms of constant base year dollars (as described in section 2430 of this title)’.

(e) CONTENTS OF SAR- Subparagraph (I) of section 2433(g)(1) of such title is amended to read as follows:

‘(I) The type of the Baseline Estimate that was included in the baseline description under section 2435 of this title and the date of the Baseline Estimate.’.

SEC. 3004. REQUIREMENT FOR INDEPENDENT COST ESTIMATES AND MANPOWER ESTIMATES BEFORE DEVELOPMENT OR PRODUCTION.

(a) CONTENT AND SUBMISSION OF ESTIMATES- Section 2434 of title 10, United States Code, is amended by striking out subsection (b) and inserting in lieu thereof the following:

‘(b) REGULATIONS- The Secretary of Defense shall prescribe regulations governing the content and submission of the estimates required by subsection (a). The regulations shall require--

‘(1) that the independent estimate of the full life-cycle cost of a program--

‘(A) be prepared by an office or other entity that is not directly responsible for carrying out the development or acquisition of the program; and

‘(B) include all costs of development, procurement, military construction, and operations and support, without regard to funding source or management control; and

‘(2) that the manpower estimate include the total personnel required--

‘(A) to operate, maintain, and support the program upon full operational deployment; and

‘(B) to train personnel to carry out the activities referred to in subparagraph (A).’.

(b) TERMINOLOGY CORRECTION AND OTHER AMENDMENT- Subsection (a) of such section is amended--

(1) by striking out ‘full-scale engineering development’ and inserting in lieu thereof ‘engineering and manufacturing development’; and

(2) by striking out ‘cost of the program, together with’ and inserting in lieu thereof ‘full life-cycle cost of the program, and’.

SEC. 3005. BASELINE DESCRIPTION.

(a) IN GENERAL- Section 2435 of title 10, United States Code, is amended to read as follows:

‘Sec. 2435. Baseline description

‘(a) BASELINE DESCRIPTION REQUIREMENT- (1) The Secretary of a military department shall establish a baseline description for each major defense acquisition program under the jurisdiction of such Secretary.

‘(2) The baseline shall include sufficient parameters to describe the cost estimate (referred to as the ‘Baseline Estimate’ in section 2433 of this title), schedule, and performance of such major defense acquisition program.

‘(3) No amount appropriated or otherwise made available to the Department of Defense for carrying out a major defense acquisition program may be obligated without an approved baseline description unless such obligation is specifically approved by the Under Secretary of Defense for Acquisition and Technology.

‘(4) A baseline description for a major defense acquisition program shall be established--

‘(A) before the program enters engineering and manufacturing development; and

‘(2) the submission of reports on deviations of a program from the baseline description by the program manager to the Secretary of the military department concerned and the Under Secretary of Defense for Acquisition and Technology;

‘(3) procedures for review of such deviation reports within the Department of Defense; and

‘(4) procedures for submission to, and approval by, the Secretary of Defense of revised baseline descriptions.’.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 144 of such title is amended by amending the item relating to section 2435 to read as follows:

‘2435. Baseline description.’.

SEC. 3006. REPEAL OF REQUIREMENT FOR COMPETITIVE PROTOTYPING IN MAJOR PROGRAMS.

(a) REPEAL- Section 2438 of title 10, United States Code, is repealed.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 144 of such title is amended by striking out the item relating to section 2438.

SEC. 3007. REPEAL OF REQUIREMENT FOR COMPETITIVE ALTERNATIVE SOURCES IN MAJOR PROGRAMS.

(a) REPEAL- Section 2439 of title 10, United States Code, is repealed.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 144 of such title is amended by striking out the item relating to section 2439.

Subtitle B--Testing Statutes

SEC. 3011. AUTHORIZATION OF LESS THAN FULL-UP TESTING.

Section 2366(c) of title 10, United States Code, is amended--

(1) by redesignating paragraph (2) as paragraph (4);

(2) by designating the second sentence of paragraph (1) as paragraph (3) and in that paragraph by striking out ‘such certification’ and inserting in lieu thereof ‘certification under paragraph (1) or (2)’; and

(3) by inserting before paragraph (3) (as so designated) the following new paragraph:

‘(2) In the case of a covered system (or covered product improvement program for a covered system), the Secretary may waive the application of the survivability and lethality tests of this section to such system or program and instead allow testing of the system or program in combat by firing munitions likely to be encountered in combat at components, subsystems, and subassemblies, together with performing design analyses, modeling and simulation, and analysis of combat data, if the Secretary certifies to Congress that the survivability and lethality testing of such system or program otherwise required by this section would be unreasonably expensive and impracticable.’.

SEC. 3012. LIMITATION ON QUANTITIES TO BE PROCURED FOR LOW-RATE INITIAL PRODUCTION.

Section 2400(a) of title 10, United States Code, is amended--

(1) in paragraph (2)--

(A) by striking out ‘paragraph (1)’ and inserting in lieu thereof ‘this section’; and

(B) by striking out ‘full-scale engineering development’ and inserting in lieu thereof ‘engineering and manufacturing development’;

(2) by redesignating paragraph (4) as paragraph (5) and in that paragraph by inserting after the first sentence the following: ‘If the quantity exceeds 10 percent of the total number of articles to be produced, as determined at the milestone II decision with respect to that system, the Secretary shall include in the statement the reasons for such quantity.’; and

(3) by inserting after paragraph (3) the following new paragraph (4):

‘(4) The quantity of articles of a major system that may be procured for low-rate initial production may not be less than one operationally configured production unit unless another quantity is established at the milestone II decision.’.

(a) AUTHORITY TO USE DIFFERENT PROCEDURES- Section 2399(b) of title 10, United States Code, is amended--

(1) by redesignating paragraph (5) as paragraph (6); and

(2) by inserting after paragraph (4) the following new paragraph (5):

‘(5) The Secretary of Defense may, for a particular major defense acquisition program, prescribe and apply operational test and evaluation procedures other than those provided under subsection (a) and paragraphs (1) through (3) of this subsection if the Secretary transmits to Congress, before the Milestone II decision is made with respect to that program--

‘(A) a certification that such testing would be unreasonably expensive and impracticable; and

‘(B) a description of the actions taken to ensure that the system will be operationally effective and suitable when the system meets initial operational capability requirements.’.

(b) CROSS REFERENCE CORRECTIONS- Section 2399 of such title is further amended--

(1) in subsection (b)(6) (as redesignated by subsection (a)(1)) and subsection (c)(1), by striking out ‘section 138(a)(2)(B)’ and inserting in lieu thereof ‘section 139(a)(2)(B)’; and

(2) in subsection (h)(1), by striking out ‘section 138(a)(2)(A)’ and inserting in lieu thereof ‘section 139(a)(2)(A)’.

Subtitle C--Civil Reserve Air Fleet

SEC. 3021. DEFINITION OF CONTRACTOR.

Section 9511(8) of title 10, United States Code, is amended--

(1) by striking out ‘or’ at the end of clause (A); and

(2) by inserting before the period at the end the following: ‘, or (C) who owns or controls, or will own or control, new or existing aircraft and who, by contract, commits some or all of such aircraft to the Civil Reserve Air Fleet’.

(1) in subsection (a) of section 9512, by inserting ‘AUTHORITY TO CONTRACT- ’ after ‘(a)’;

(2) in subsection (c) of section 9512, by striking out ‘(c)’ and inserting in lieu thereof ‘(d) AUTHORITY TO CONTRACT AND PAY DIRECTLY- ’;

(3) in subsection (b) of section 9512, by striking out ‘(b)’ and inserting in lieu thereof ‘(c) TERMS AND REQUIRED REPAYMENT- ’;

(4) by redesignating subsection (a) of section 9513 as subsection (b) and transferring such subsection (as so redesignated) to section 9512 and inserting such subsection after subsection (a);

(5) by redesignating subsection (b) of section 9513 as subsection (e) and transferring such subsection (as so redesignated) to the end of section 9512;

(6) in subsection (b) of section 9512, as redesignated and transferred to such section by paragraph (4)--

(A) by striking out ‘under section 9512 of this title’ and inserting in lieu thereof ‘entered into under this section’, and

(B) by inserting ‘CONTRACT REQUIREMENTS- ’ after ‘(b)’;

(7) in subsection (c) of section 9512, as redesignated by paragraph (3), by striking out ‘the terms required by section 9513 of this title and’;

(8) in subsection (e) of section 9512, as redesignated and transferred to such section by paragraph (5)--

(A) by striking out ‘under section 9512 of this title’ and inserting in lieu thereof ‘entered into under this section’, and

(B) by inserting ‘COMMITMENT TO CIVIL RESERVE AIR FLEET- ’ after ‘(e)’; and

(9) by striking out the heading of section 9513.

SEC. 3023. USE OF MILITARY INSTALLATIONS BY CONTRACTORS.

(a) AUTHORITY- Chapter 931 of title 10, United States Code, as amended by section 3022, is further amended by adding at the end the following new section 9513:

‘Sec. 9513. Use of military installations by Civil Reserve Air Fleet contractors

‘(a) CONTRACT AUTHORITY- (1) The Secretary of the Air Force--

‘(A) may, by contract entered into with any contractor, authorize such contractor to use one or more Air Force installations designated by the Secretary; and

‘(B) with the consent of the Secretary of another military department, may, by contract entered into with any contractor, authorize the contractor to use one or more installations, designated by the Secretary of the Air Force, that is under the jurisdiction of the Secretary of such other military department.

‘(2) The Secretary of the Air Force may include in the contract such terms and conditions as the Secretary determines appropriate to promote the national defense or to protect the interests of the United States.

‘(b) PURPOSES OF USE- A contract entered into under subsection (a) may authorize use of a designated installation as a weather alternate, a technical stop not involving the enplaning or deplaning of passengers or cargo, or, in the case of an installation within the United States, for other commercial purposes. Notwithstanding any other provision of the law, the Secretary may establish different levels and types of uses for different installations and may provide in contracts under subsection (a) for different levels and types of uses by different contractors.

‘(c) HOLD HARMLESS REQUIREMENT- A contract entered into under subsection (a) shall provide that the contractor agrees to indemnify and hold harmless the Air Force (and any other armed force having jurisdiction over any installation covered by the contract) from all actions, suits, or claims of any sort resulting from, relating to, or arising out of any activities conducted, or services or supplies furnished, in connection with the contract.

‘(d) RESERVATION OF RIGHT TO EXCLUDE CONTRACTOR- A contract entered into under subsection (a) shall provide that the Secretary concerned may, without providing prior notice, deny access to an installation designated under the contract when the Secretary determines that it is necessary to do so in order to meet military exigencies.’.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of such chapter is amended by striking out the item relating to section 9513 and inserting in lieu thereof the following:

‘9513. Use of military installations by Civil Reserve Air Fleet contractors.’.

Subtitle D--Miscellaneous

SEC. 3051. EXTENSION TO DEPARTMENT OF DEFENSE GENERALLY OF PROVISION RELATING TO MANUFACTURE AT FACTORIES AND ARSENALS.

(a) CONSOLIDATION, REVISION, AND EXTENSION TO DEPARTMENT OF DEFENSE OF AUTHORITY- (1) Subchapter V of chapter 148 of title 10, United States Code, is amended by adding at the end the following new section:

‘Sec. 2542. Factories and arsenals: manufacture at

‘(a) The Secretary of Defense or the Secretary of a military department may have supplies needed for the Department of Defense or such military department, as the case may be, made in factories or arsenals owned by the United States.

‘(b) The Secretary of Defense or the Secretary of the military department concerned may abolish any United States arsenal that such Secretary considers unnecessary.’.

(2) The table of sections at the beginning of subchapter V of such chapter is amended by adding at the end the following new item:

‘2542. Factories and arsenals: manufacture at.’.

(b) REPEAL OF SUPERSEDED AUTHORITY-

(1) ARMY AUTHORITY-

(A) REPEAL- Section 4532 of title 10, United States Code, is repealed.

(B) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 433 of such title is amended by striking out the item relating to section 4532.

(2) AIR FORCE AUTHORITY-

(A) REPEAL- Section 9532 of title 10, United States Code, is repealed.

(B) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 933 of such title is amended by striking out the item relating to section 9532.

(a) FUNDING TO BE IDENTIFIED IN BUDGET- Section 1105 of title 31, United States Code, is amended by adding at the end the following new subsection:

‘(g)(1) The Director of the Office of Management and Budget shall establish the funding for consulting services for each department and agency as a separate object class in each budget annually submitted to the Congress under this section.

‘(2) In this subsection, consulting services include--

‘(A) management and professional support services;

‘(B) studies, analyses, and evaluations;

‘(C) engineering and technical services (excluding routine engineering services such as automated data processing and architect and engineering contracts); and

‘(D) research and development.’.

(b) REPEAL OF SOURCE LAW- Section 512 of Public Law 102-394 (106 Stat. 1826) is repealed.

(c) REPEAL OF SUPERSEDED PROVISIONS-

(1) DOD SPECIFIC LAW- Section 2212 of title 10, United States Code, is repealed.

(2) GOVERNMENT-WIDE LAW- Section 1114 of title 31, United States Code, is repealed.

(3) CLERICAL AMENDMENTS- The table of sections at the beginning of chapter 131 of title 10, United States Code, is amended by striking out the item relating to section 2212. The table of sections at the beginning of chapter 11 of title 31, United States Code, is amended by striking out the item relating to section 1114.

‘The Secretary of Defense shall prescribe regulations governing the performance within the Department of Defense of the procurement, production, warehousing, and supply distribution functions, and related functions, of the Department of Defense.’.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 131 of such title is amended by striking out the item related to section 2202 and inserting in lieu thereof the following:

(a) REPEAL- Section 2369 of title 10, United States Code, is repealed.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 139 of such title is amended by striking out the item related to section 2369.

SEC. 3055. CODIFICATION AND REVISION OF LIMITATION ON LEASE OF VESSELS, AIRCRAFT, AND VEHICLES.

(a) LIMITATION- (1) Chapter 141 of title 10, United States Code, is amended by inserting after section 2401 the following new section:

‘Sec. 2401a. Lease of vessels, aircraft, and vehicles

‘The Secretary of Defense or the Secretary of a military department may not enter into any contract with a term of 18 months or more, or extend or renew any contract for a term of 18 months or more, for any vessel, aircraft, or vehicle, through a lease, charter, or similar agreement, unless the Secretary has considered all costs of such contract (including estimated termination liability) and has determined in writing that the contract is in the best interest of the Government.’.

(2) The table of sections at the beginning of such chapter is amended by inserting after the item relating to section 2401 the following new item:

(a) REPEAL- Section 7299 of title 10, United States Code, is repealed.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 633 of such title is amended by striking out the item relating to section 7299.

TITLE IV--SIMPLIFIED ACQUISITION THRESHOLD AND SOCIOECONOMIC, SMALL BUSINESS, AND MISCELLANEOUS LAWS

Subtitle A--Simplified Acquisition Threshold

PART I--ESTABLISHMENT OF THRESHOLD

SEC. 4001. ESTABLISHMENT OF SIMPLIFIED ACQUISITION THRESHOLD.

The Office of Federal Procurement Policy Act (41 U.S.C. 401 et seq.) is amended by inserting after section 4 the following new section:

‘SEC. 4A. SIMPLIFIED ACQUISITION THRESHOLD.

‘(a) IN GENERAL- The simplified acquisition threshold for purposes of Federal acquisitions is (except as provided in subsection (b)) the amount of $25,000, as adjusted pursuant to subsection (c).

‘(b) AGENCIES WITH FACNET CAPABILITY- In the case of an agency for which there is in effect a certification under section 2302b(c) of title 10, United States Code, or section 302B(c) of the Federal Property and Administrative Services Act of 1949 with respect to implementation of a FACNET capability, the simplified acquisition threshold is the amount of $100,000, as adjusted pursuant to subsection (c).

‘(c) PERIODIC ADJUSTMENT FOR INFLATION- The dollar amount in effect under subsection (a) shall be adjusted on October 1 of each year divisible by 5 to the equivalent amount in constant fiscal year 1990 dollars (rounded to the nearest $1,000). The dollar amount in effect under subsection (b) shall be adjusted on October 1 of each year divisible by 5 to the equivalent amount in constant fiscal year 1993 dollars (rounded to the nearest $1,000).

‘(d) SPECIAL RULE FOR CONTINGENCY OPERATIONS- In the case of a contract to be awarded and performed, or a purchase to be made, outside the United States in support of a contingency operation (as defined in section 101(a)(13) of title 10, United States Code), the amounts in effect under subsections (a) and (b) shall be two times the amounts otherwise applicable.’.

SEC. 4002. FEDERAL ACQUISITION COMPUTER NETWORK.

‘SEC. 29. FEDERAL ACQUISITION COMPUTER NETWORK (FACNET).

‘(a) IN GENERAL- (1) The Administrator shall establish a program for the development and implementation of a Federal acquisition computer network (hereinafter in this section referred to as the ‘FACNET’). The Administrator shall assign a program manager for the FACNET and shall provide for overall direction of policy and leadership in the development, coordination, installation, operation, and completion of implementation of the FACNET by executive agencies.

‘(2) In carrying out paragraph (1), the Administrator shall consult with appropriate Federal agencies with applicable technical and functional expertise, including the National Institute of Standards and Technology, the General Services Administration, and the Department of Defense.

‘(3) The Administrator shall carry out paragraph (1) not later than the date that is 5 years after the date of enactment of the Federal Acquisition Improvement Act of 1994.

‘(b) FUNCTIONS OF FACNET- The FACNET shall have the capacity to carry out the following functions:

‘(1) GOVERNMENT FUNCTIONS-

‘(A) Provide widespread public notice of solicitations for contract opportunities issued by an executive agency and of orders to be made by the agency.

‘(B) Allow responses to solicitations and requests for information to be submitted to the contracting activity through such system.

‘(C) Allow public notice of contract awards to be provided through such system.

‘(D) In cases in which it is practicable, allow questions regarding solicitations to be answered through such system.

‘(E) Allow orders to be made through such system.

‘(F) In cases in which it is practicable, make payments to contractors by bank card, electronic funds transfer, or other automated methods.

‘(G) Archive data relating to each procurement action made using such system.

‘(2) USER FUNCTIONS- Allow private users to electronically--

‘(A) access notice of solicitations for contract opportunities issued by an agency and of orders to be made by the agency;

‘(B) selectively access and review solicitations and orders issued by the agency;

‘(C) respond to solicitations and notices of orders issued by the agency;

‘(D) receive orders from the agency;

‘(E) access information on contract awards made by the agency; and

‘(F) in cases in which it is practicable, receive payment by bank card, electronic funds transfer, or other automated means.

‘(3) GENERAL FUNCTIONS-

‘(A) Allow the electronic exchange of procurement information between the private sector and the Federal Government.

‘(B) Employ nationally and internationally recognized data formats that serve to broaden and ease the electronic interchange of data.

‘(C) Allow convenient and universal user access through a single point of entry.

‘(c) ANNUAL REPORTS TO CONGRESS- The Administrator shall evaluate progress by executive agencies in implementing the FACNET under this section. The Administrator shall submit to the Congress, on the date that is one year after the date of the enactment of the Federal Acquisition Improvement Act of 1994 and on that date in each of the 5 years thereafter, a report on the overall progress by the executive branch and by each executive agency in implementing this section.’.

(1) in subsection (a)(1)(A), by striking out ‘notice’ in the matter following clause (ii) and inserting in lieu thereof ‘notice of solicitation’; and

(2) in subsection (d), by striking out ‘a notice under subsection (e)’ in the first sentence and inserting in lieu thereof ‘a notice of solicitation under subsection (a)’.

SEC. 4003. IMPLEMENTATION IN ARMED SERVICES.

(a) ESTABLISHMENT IN TITLE 10- Chapter 137 of title 10, United States Code, is amended by inserting after section 2302 the following new sections:

‘Sec. 2302a. Simplified acquisition threshold

‘(a) SIMPLIFIED ACQUISITION THRESHOLD- For purposes of acquisitions by agencies named in section 2303 of this title, the simplified acquisition threshold is as specified in section 4A of the Office of Federal Procurement Policy Act, as in effect on the effective date of section 4001 of the Federal Acquisition Improvement Act of 1994.

‘Sec. 2302b. Implementation of FACNET capability

‘(a) IMPLEMENTATION OF FACNET CAPABILITY- (1) The head of each agency named in section 2303 of this title shall implement the Federal acquisition computer network (‘FACNET’) capability required by section 29 of the Office of Federal Procurement Policy Act. In the case of the Department of Defense, the implementation shall be by the Secretary of Defense for the Department of Defense as a whole. For purposes of this section, the term ‘head of an agency’ does not include the Secretaries of the military departments.

‘(2) In implementing the FACNET capability pursuant to paragraph (1), the head of an agency shall consult with the Administrator for Federal Procurement Policy.

‘(b) DESIGNATION OF AGENCY OFFICIAL- The Secretary of Defense shall designate the Under Secretary of Defense for Acquisition and Technology to have responsibility for implementation of FACNET capability throughout the Department of Defense. The head of each agency named in paragraph (5) or (6) of section 2303 of this title shall designate a program manager to have responsibility for implementation of FACNET capability for that agency and otherwise to implement this section.

‘(c) CERTIFICATION OF FACNET CAPABILITY- (1) When the head of an agency, with the concurrence of the Administrator for Federal Procurement Policy, determines that the agency has implemented an interim FACNET capability (as defined in subsection (f)), the head of the agency shall certify to Congress that the agency has implemented an interim FACNET capability.

‘(2) When the head of an agency, with the concurrence of the Administrator for Federal Procurement Policy, determines that the agency has implemented a full FACNET capability (as defined in subsection (g)), the head of the agency shall certify to Congress that the agency has implemented a full FACNET capability.

‘(3) The head of each agency shall provide for implementation of both interim FACNET capability and full FACNET capability, with priority on providing convenient and universal user access as required by section 29(b)(3)(C) of the Office of Federal Procurement Policy Act, in that agency as soon as practicable after the date of the enactment of the Federal Acquisition Improvement Act of 1994.

‘(d) HIGHER SIMPLIFIED ACQUISITION THRESHOLD WHEN FACNET CAPABILITY CERTIFIED- A certification to Congress under subsection (c) shall be considered to be a certification for purposes of the higher simplified acquisition threshold under section 4A(b) of the Office of Federal Procurement Policy Act, except that a certification under paragraph (1) of subsection (c) shall not constitute such a certification in the case of solicitations issued after the end of the five-year period beginning on the date of the enactment of the Federal Acquisition Improvement Act of 1994.

‘(e) EXEMPTION FROM NOTICE PROVISIONS- An agency is exempt from the requirements of section 18(a)(1) of the Office of Federal Procurement Policy Act (41 U.S.C. 416(a)(1)) if the head of the agency makes the certification described in subsection (c)(1).

‘(f) IMPLEMENTATION OF INTERIM FACNET CAPABILITY- An agency shall be considered to have implemented an interim FACNET capability if (except in the case of contracting activities (or portions thereof) of the agency for which the head of the agency determines that implementation is not cost effective or practicable)--

‘(1) with respect to each procurement expected to be in an amount greater than $25,000, the agency has implemented the FACNET functions described in paragraphs (1)(A) and (2)(A) of section 29(b) of the Office of Federal Procurement Policy Act, as in effect on the effective date of section 4002 of the Federal Acquisition Improvement Act of 1994; and

‘(2) with respect to each procurement expected to be in an amount greater than $25,000, the agency issues notices of solicitations through a system with those functions for all contracting opportunities other than in cases covered by section 18(c) of the Office of Federal Procurement Policy Act (41 U.S.C. 416(c)).

‘(g) IMPLEMENTATION OF FULL FACNET CAPABILITY- (1) An agency shall be considered to have implemented a full FACNET capability if (except in the case of contracting activities (or portions thereof) of the agency for which the head of the agency determines that implementation is not cost effective or practicable) the agency has implemented all of the FACNET functions described in section 29(b) of the Office of Federal Procurement Policy Act, as in effect on the effective date of section 4002 of the Federal Acquisition Improvement Act of 1994.

‘(2) For purposes of paragraph (1), an agency may not be considered to have implemented a full FACNET capability if--

‘(A) the head of the agency has determined that implementation of FACNET capability is not cost effective or practicable in the case of certain contracting activities (or portions thereof) of the agency; and

‘(B) the percentage of the procurement actions executed by those contracting activities (or portions thereof) for the preceding fiscal year is greater than 25 percent of the total number of procurement actions executed by the agency for that year.

‘(h) CONTRACTING ACTIVITIES ORIGINALLY EXCLUDED IN CERTIFICATION- (1) If the head of an agency, in certifying under subsection (c) that the agency has implemented an interim or a full FACNET capability, determines that such implementation is not cost effective or practicable in the case of any contracting activity (or portion thereof) of that agency, then that certification shall not apply under section 4A(b) of the Office of Federal Procurement Policy Act to any procurement action by that contracting activity (or portion thereof).

‘(2) If the head of an agency determines that an interim or a full FACNET capability has subsequently been implemented for that contracting activity (or portion thereof), the head of the agency shall make a certification to the Administrator for Federal Procurement Policy in the same manner as a certification under paragraph (1) or (2) of subsection (c), as applicable, and such certification shall have the same effect with respect to that contracting activity (or portion thereof) as if made under such paragraph of subsection (c).’.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 137 of such title is amended by inserting after the item relating to section 2302 the following new items:

‘2302a. Simplified acquisition threshold.

‘2302b. Implementation of FACNET capability.’.

SEC. 4004. IMPLEMENTATION IN CIVILIAN AGENCIES.

Title III of the Federal Property and Administrative Services Act of 1949 is amended by inserting after section 302 the following new sections:

‘SEC. 302A. SIMPLIFIED ACQUISITION THRESHOLD.

‘(a) SIMPLIFIED ACQUISITION THRESHOLD- For purposes of acquisitions by executive agencies, the simplified acquisition threshold is as specified in section 4A of the Office of Federal Procurement Policy Act, as in effect on the effective date of section 4001 of the Federal Acquisition Improvement Act of 1994.

‘SEC. 302B. IMPLEMENTATION OF FACNET CAPABILITY.

‘(a) IMPLEMENTATION OF FACNET CAPABILITY- (1) The head of each executive agency shall implement the Federal acquisition computer network (‘FACNET’) capability required by section 29 of the Office of Federal Procurement Policy Act.

‘(2) In implementing the FACNET capability pursuant to paragraph (1), the head of an executive agency shall consult with the Administrator for Federal Procurement Policy.

‘(b) DESIGNATION OF AGENCY OFFICIAL- The head of each executive agency shall designate a program manager to have responsibility for implementation of FACNET capability for that agency and otherwise to implement this section.

‘(c) CERTIFICATION OF FACNET CAPABILITY- (1) When the head of an executive agency, with the concurrence of the Administrator for Federal Procurement Policy, determines that the agency has implemented an interim FACNET capability (as defined in subsection (f)), the head of the agency shall certify to Congress that the agency has implemented an interim FACNET capability.

‘(2) When the head of an executive agency, with the concurrence of the Administrator for Federal Procurement Policy, determines that the agency has implemented a full FACNET capability (as defined in subsection (g)), the head of the agency shall certify to Congress that the agency has implemented a full FACNET capability.

‘(3) The head of each executive agency shall provide for implementation of both interim FACNET capability and full FACNET capability, with priority on providing convenient and universal user access as required by section 29(b)(3)(C) of the Office of Federal Procurement Policy Act, in that agency as soon as practicable after the date of the enactment of the Federal Acquisition Improvement Act of 1994.

‘(d) HIGHER SIMPLIFIED ACQUISITION THRESHOLD WHEN FACNET CAPABILITY CERTIFIED- A certification to Congress under subsection (c) shall be considered to be a certification for purposes of the higher simplified acquisition threshold under section 4A(b) of the Office of Federal Procurement Policy Act, except that a certification under paragraph (1) of subsection (c) shall not constitute such a certification in the case of solicitations issued after the end of the five-year period beginning on the date of the enactment of the Federal Acquisition Improvement Act of 1994.

‘(e) EXEMPTION FROM NOTICE PROVISIONS- An executive agency is exempt from the requirements of section 18(a)(1) of the Office of Federal Procurement Policy Act (41 U.S.C. 416(a)(1)) if the head of the agency makes the certification described in subsection (c)(1).

‘(f) IMPLEMENTATION OF INTERIM FACNET CAPABILITY- An executive agency shall be considered to have implemented an interim FACNET capability if (except in the case of contracting activities (or portions thereof) of the agency for which the head of the agency determines that implementation is not cost effective or practicable)--

‘(1) with respect to each procurement expected to be in an amount greater than $25,000, the executive agency has implemented the FACNET functions described in paragraphs (1)(A) and (2)(A) of section 29(b) of the Office of Federal Procurement Policy Act, as in effect on the effective date of section 4002 of the Federal Acquisition Improvement Act of 1994; and

‘(2) with respect to each procurement expected to be in an amount greater than $25,000, the executive agency issues notices of solicitations through a system with those functions for all contracting opportunities other than in cases covered by section 18(c) of the Office of Federal Procurement Policy Act (41 U.S.C. 416(c)).

‘(g) IMPLEMENTATION OF FULL FACNET CAPABILITY- (1) An executive agency shall be considered to have implemented a full FACNET capability if (except in the case of contracting activities (or portions thereof) of the agency for which the head of the agency determines that implementation is not cost effective or practicable) the executive agency has implemented all of the FACNET functions described in section 29(b) of the Office of Federal Procurement Policy Act, as in effect on the effective date of section 4002 of the Federal Acquisition Improvement Act of 1994.

‘(2) For purposes of paragraph (1), an executive agency may not be considered to have implemented a full FACNET capability if--

‘(A) the head of the agency has determined that implementation of FACNET capability is not cost effective or practicable in the case of certain contracting activities (or portions thereof) of the agency; and

‘(B) the percentage of the procurement actions executed by those contracting activities (or portions thereof) for the preceding fiscal year is greater than 25 percent of the total number of procurement actions executed by the agency for that year.

‘(h) CONTRACTING ACTIVITIES ORIGINALLY EXCLUDED IN CERTIFICATION- (1) If the head of an executive agency, in certifying under subsection (c) that the agency has implemented an interim or a full FACNET capability, determines that such implementation is not cost effective or practicable in the case of any contracting activity (or portion thereof) of that agency, then that certification shall not apply under section 4A(b) of the Office of Federal Procurement Policy Act to any procurement action by that contracting activity (or portion thereof).

‘(2) If the head of an executive agency determines that an interim or a full FACNET capability has subsequently been implemented for that contracting activity (or portion thereof), the head of the agency shall make a certification to Administrator for Federal Procurement Policy in the same manner as a certification under paragraph (1) or (2) of subsection (c), as applicable, and such certification shall have the same effect with respect to that contracting activity (or portion thereof) as if made under such paragraph of subsection (c).’.

PART II--SIMPLIFICATION OF PROCEDURES

SEC. 4011. SMALL BUSINESS PROVISIONS.

(a) INTERIM REPORTING RULE- Notwithstanding section 4A of the Office of Federal Procurement Policy Act, as added by section 4001, during the 5-year period beginning on the date of the issuance in final form of revisions to the Federal Acquisition Regulation under section 4B of the Office of Federal Procurement Policy Act, as added by section 4012, contracting activities shall continue to report, pursuant to section 19(d) of the Office of Federal Procurement Policy Act (41 U.S.C. 417(d)), procurement awards with a dollar value of at least $25,000, but less than $100,000, in conformity with the procedures for the reporting of a contract award in excess of $25,000 in effect on November 18, 1993.

(1) in paragraph (7), by striking out ‘and’ after the semicolon at the end; and

(2) by redesignating paragraph (8) as paragraph (10) and inserting after paragraph (7) the following:

‘(8) developing policies, in consultation with the Administrator of the Small Business Administration, that ensure that small businesses and small businesses owned and controlled by socially and economically disadvantaged persons are provided with the maximum practicable opportunities to participate in procurements that are conducted for amounts below the simplified acquisition threshold;

‘(9) developing policies that will promote achievement of goals for participation by small businesses and small businesses owned and controlled by socially and economically disadvantaged individuals;’.

SEC. 4012. PROCEDURES FOR PURCHASES BELOW MICRO-PURCHASE THRESHOLD.

The Office of Federal Procurement Policy Act (41 U.S.C. 401 et seq.) is amended by inserting after section 4A, as added by section 4001, the following new section:

‘(a) REQUIREMENTS- (1) The head of each executive agency shall ensure that contracting activities of that agency, in awarding a contract with a price exceeding the micro-purchase threshold, comply with the requirements of section 8(a) of the Small Business Act (15 U.S.C. 637(a)) and section 2323 of title 10, United States Code, or section 316 of the Federal Property and Administrative Services Act of 1949, as applicable to that agency.

‘(2) The authority under part 13.106(a)(1) of the Federal Acquisition Regulation (48 C.F.R. 13.106(a)(1)), as in effect on November 18, 1993, to make purchases without securing competitive quotations does not apply to any purchases with a price exceeding the micro-purchase threshold.

‘(3) The head of each executive agency shall ensure that contracting activities of that agency comply with the requirements of section 15(j) of the Small Business Act (15 U.S.C. 644(j)), relating to the small business reserve.

‘(b) EXCLUSIONS FOR MICRO-PURCHASES- A purchase by an executive agency with an anticipated value of the micro-purchase threshold or less is not subject to the Act of March 3, 1933, commonly referred to as the ‘Buy American Act’ (41 U.S.C. 10a-10c).

‘(c) CERTAIN CONTRACTING OFFICIALS NOT TO BE CONSIDERED PROCUREMENT OFFICIALS- Any civilian officer or employee, and any member of the Armed Forces, who has authority to enter into contracts but whose contracting authority is limited to the amount of the micro-purchase threshold or less is not a procurement official as defined in paragraph (3)(A) of section 27(p) of the Office of Federal Procurement Policy Act (41 U.S.C. 423(p)).

‘(d) IMPLEMENTATION THROUGH FAR- The provisions of subsections (a), (b), and (c) shall be implemented through the Federal Acquisition Regulation.

‘(e) MICRO-PURCHASE THRESHOLD DEFINED- For purposes of this subsection, the micro-purchase threshold is the amount of $2,500, adjusted on October 1 of each year divisible by 5 to the equivalent amount in constant fiscal year 1993 dollars (rounded to the nearest $100).’.

SEC. 4013. PROCUREMENT NOTICE.

(A) by striking out ‘the small purchase threshold’ each place it appears and inserting in lieu thereof ‘the simplified acquisition threshold’;

(B) by striking out ‘(c)--’ in the matter preceding subparagraph (A) and inserting in lieu thereof ‘(c):’;

(C) by striking out ‘an executive’ at the beginning of subparagraphs (A) and (C) and inserting in lieu thereof ‘An executive’;

(D) by striking out the semicolon at the end of subparagraph (A) and inserting in lieu thereof a period; and

(E) by amending subparagraph (B) to read as follows:

‘(B) An executive agency intending to solicit bids or proposals for a contract for property or services for a price expected to exceed $10,000 but not to exceed the simplified acquisition threshold shall post a notice of solicitation described in subsection (b). The notice shall be posted at the contracting office issuing the solicitation or shall be made available through an electronic system with a FACNET capability that at least meets the requirements of paragraphs (1)(A) and (2)(A) of section 29(b). The notice shall be posted for a period of not less than 10 days, except that in the case of a posting made through an electronic system with such a FACNET capability, the posting may be for a period of less than 10 days as prescribed in the Federal Acquisition Regulation.’.

(2) Paragraph (3)(B) is amended by inserting after ‘(B)’ the following: ‘in the case of a contract or order for an amount expected to exceed the simplified acquisition threshold,’.

(b) OPPORTUNITY FOR ALL RESPONSIBLE POTENTIAL OFFERORS- Such subsection is further amended by adding at the end the following:

‘(4) An executive agency intending to solicit offers for a contract for which a notice of solicitation is required to be posted under paragraph (1)(B) shall ensure that all potential offerors are permitted to respond to the solicitation for the contract within the period of time specified in the solicitation for the submission of offers.’.

(c) ESTABLISHMENT OF DEADLINE FOR SUBMISSION OF OFFERS- Such subsection is further amended by inserting after paragraph (4), as added by subsection (b), the following new paragraph:

‘(5) An executive agency shall establish a deadline for the submission of all bids or proposals in response to a notice of solicitation with respect to which no such deadline is provided by statute.’.

(d) EXCEPTIONS- Subsection (c) of such section is amended by adding at the end the following new paragraph:

‘(4)(A) The requirements of subsection (a)(1) shall not apply in the case of an acquisition accomplished through the use of an electronic system with a FACNET capability, as described in section 29 and certified under section 2302a of title 10, United States Code, or section 302A of the Federal Property and Administrative Services Act of 1949.

‘(B) The Federal Acquisition Regulation shall provide for minimum periods of time for submission of offers for acquisitions described in subparagraph (A). Such periods shall provide offerors a reasonable opportunity to respond.

‘(C) A notice of solicitation of bids or proposals for an acquisition described in subparagraph (A) shall include the matter described in under subsection (b).’.

(a) PERFORMANCE TEST- The Comptroller General of the United States shall collect data and assess the effects of the simplified acquisition threshold, as established in section 4A of the Office of Federal Procurement Policy Act, on the participation of small business concerns (including small business concerns owned and controlled by socially and economically disadvantaged individuals) in procurement awards of less than $100,000 and the benefits and detriments, if any, to the buying activities of the various Executive agencies.

(b) DATA TO BE COLLECTED- Data collected under subsection (a) shall include data regarding whether the establishment of the simplified acquisition threshold has improved the acquisition process in terms of reduced paperwork, financial or other savings to the Federal Government, and any increase in the number of contractors participating in the contracting process.

(c) PERIOD- Data shall be collected for purposes of subsection (a) during the period beginning with the first full fiscal year quarter after the effective date of the amendments made by section 4001 and ending on September 30, 1997.

(d) REPORT- By March 1, 1998, the Comptroller General shall submit to Congress a report on the effects of the establishment of the simplified acquisition threshold by the amendments made by section 4001.

PART III--INAPPLICABILITY OF LAWS TO ACQUISITIONS NOT IN EXCESS OF SIMPLIFIED ACQUISITION THRESHOLD

Subpart A--Generally

(a) ARMED SERVICES- Section 2302a of title 10, United States Code, as added by section 4003(a), is amended by adding at the end the following new subsection:

‘(b) CONSTRUCTION WITH FUTURE ENACTMENTS- A provision of law enacted after the date of the enactment of the Federal Acquisition Improvement Act of 1994 shall not be construed as applicable to purchases of property or services by an agency named in section 2303 of this title for an amount not in excess of the simplified acquisition threshold unless that provision of law specifically refers to this section and specifically states that such provision of law modifies or supersedes this section.’.

(b) AGENCIES- Section 302A of the Federal Property and Administrative Services Act of 1949, as added by section 4004(a), is amended by adding at the end the following new subsection:

‘(b) CONSTRUCTION WITH FUTURE ENACTMENTS- A provision of law enacted after the date of the enactment of the Federal Acquisition Improvement Act of 1994 shall not be construed as applicable to purchases of property or services by an executive agency for an amount not in excess of the simplified acquisition threshold unless that provision of law specifically refers to this section and specifically states that such provision of law modifies or supersedes this section.’.

Subpart B--Armed Services Acquisitions

SEC. 4031. INAPPLICABILITY OF CERTAIN PROVISIONS OF LAW.

Section 2302a of title 10, United States Code, as amended by section 4021, is further amended by adding at the end the following new subsection:

‘(c) INAPPLICABILITY OF CERTAIN PROVISIONS OF LAW- The following provisions of law (and regulations prescribed under such provisions) shall not apply to any contract entered into by the Department of Defense in an amount not greater than the simplified acquisition threshold:

‘(1) Section 2306(b) of this title (relating to prohibition on contingent fees).

‘(2) Section 2313 of this title (relating to examination of books and records of contractor).

‘(3) Section 2384(b) of this title (relating to requirement to identify suppliers and sources of supplies).

‘(4) Section 2393(d) of this title (relating to prohibition against doing business with certain offerors of contractors).

‘(5) Section 2402 of this title (relating to prohibition on limitation of subcontractor direct sales).

‘(6) Section 2408(a) of this title (relating to prohibition on persons convicted of defense-contract related felonies).

‘(7) Section 2410b of this title (relating to contractor inventory accounting system standards).

‘(8) Section 2534 of this title (relating to miscellaneous limitations on procurement of goods other than American goods).

(a) INAPPLICABILITY OF REQUIREMENT FOR CONTRACT CLAUSE REGARDING CONTINGENT FEES- Section 2306(b) of title 10, United States Code, is amended by adding at the end the following: ‘This subsection does not apply to a contract that is for an amount not in excess of the simplified acquisition threshold.’.

(b) INAPPLICABILITY OF AUTHORITY TO EXAMINE BOOKS AND RECORDS OF CONTRACTORS- Section 2313 of title 10, United States Code, as amended by section 2201, is further amended by adding at the end of subsection (f) the following:

‘(2) A contract that is for an amount not in excess of the simplified acquisition threshold.’.

(c) INAPPLICABILITY OF REQUIREMENT TO IDENTIFY SUPPLIERS AND SOURCES OF SUPPLIES- Section 2384(b) of title 10, United States Code, is amended by adding at the end the following new paragraph:

‘(3) The regulations prescribed pursuant to paragraph (1) do not apply to a contract for an amount that does not exceed the simplified acquisition threshold.’.

(d) INAPPLICABILITY OF PROHIBITION AGAINST DOING BUSINESS WITH CERTAIN OFFERORS OR CONTRACTORS- Section 2393(d) of title 10, United States Code, is amended in the second sentence by striking out ‘above’ and all that follows and inserting in lieu thereof ‘in excess of the simplified acquisition threshold.’.

(e) INAPPLICABILITY OF PROHIBITION ON LIMITING SUBCONTRACTOR DIRECT SALES TO THE UNITED STATES- Section 2402 of title 10, United States Code, is amended by adding at the end the following new subsection:

‘(c) This section does not apply to a contract that is for an amount not in excess of the simplified acquisition threshold.’.

(f) INAPPLICABILITY OF PROHIBITION ON PERSONS CONVICTED OF DEFENSE-RELATED FELONIES- Section 2408(a) of title 10, United States Code, is amended by adding at the end the following new paragraph:

‘(4) In this subsection, the term ‘defense contract’ means a contract in an amount in excess of the simplified acquisition threshold.’.

(g) INAPPLICABILITY OF CONTRACTOR INVENTORY ACCOUNTING SYSTEM STANDARDS- Section 2410b of title 10, United States Code, is amended--

(1) by inserting ‘(a)’ before ‘The Secretary’; and

(2) by adding at the end the following:

‘(b) The regulations prescribed pursuant to subsection (a) shall not apply to a contract that is for an amount not in excess of the simplified acquisition threshold.’.

(h) INAPPLICABILITY OF MISCELLANEOUS PROCUREMENT LIMITATIONS- Section 2534 of title 10, United States Code, is amended by adding at the end the following:

‘(g) INAPPLICABILITY TO CONTRACTS UNDER SIMPLIFIED ACQUISITION THRESHOLD- This section does not apply to a contract for an amount that does not exceed the simplified acquisition threshold.’.

Subpart C--Civilian Agency Acquisitions

SEC. 4041. INAPPLICABILITY OF CERTAIN PROVISIONS OF LAW.

Section 302A of the Federal Property and Administrative Services Act of 1949, as amended by section 4021(b), is further amended by adding at the end the following new subsection:

‘(c) INAPPLICABILITY OF CERTAIN PROVISIONS OF LAW- The following provisions of law (and regulations prescribed under such provisions) shall not apply to any contract entered into by an executive agency in an amount not greater than the simplified acquisition threshold:

(a) INAPPLICABILITY OF PROHIBITION ON LIMITING SUBCONTRACTOR DIRECT SALES TO THE UNITED STATES- Section 303G of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253g) is amended by adding at the end the following new subsection:

‘(c) This section does not apply to a contract for an amount that is not in excess of the simplified acquisition threshold.’.

(b) INAPPLICABILITY OF REQUIREMENT FOR CONTRACT CLAUSE REGARDING CONTINGENT FEES- Section 304(a) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 254(a)) is amended by adding at the end the following: ‘The preceding sentence does not apply to a contract for an amount that is not in excess of the simplified acquisition threshold.’.

(c) INAPPLICABILITY OF AUTHORITY TO EXAMINE BOOKS AND RECORDS OF CONTRACTORS- Section 304C of the Federal Property and Administrative Services Act of 1949, as added by section 2251(a), is amended by adding at the end of subsection (e) the following:

‘(2) A contract that is for an amount not in excess of the simplified acquisition threshold.’.

Subpart D--Acquisitions Generally

SEC. 4051. CONFORMANCE OF CERTAIN PROCUREMENT INTEGRITY REQUIREMENTS.

Subsection (e)(7)(A) of section 27 of the Office of Federal Procurement Policy Act (41 U.S.C. 423) is amended by inserting after ‘$100,000’ the following: ‘or the simplified acquisition threshold, whichever is greater’.

SEC. 4052. INAPPLICABILITY OF THE DRUG-FREE WORKPLACE ACT OF 1988.

Section 5152(a)(1) of the Drug-Free Workplace Act of 1988 (subtitle D of title V of the Anti-Drug Abuse Act of 1988; Public Law 100-690; 41 U.S.C. 701(a)(1)) is amended by striking out ‘of $25,000 or more from any Federal agency’ and inserting in lieu thereof ‘in excess of the simplified acquisition threshold (as defined in section 4A of such Act) by any Federal agency’.

PART IV--CONFORMING AMENDMENTS

SEC. 4071. ARMED SERVICES ACQUISITIONS.

(a) SIMPLIFIED ACQUISITION PROCEDURES- Section 2304(g) of title 10, United States Code, is amended--

(1) in paragraph (1), by striking out ‘small purchases of property and services’ and inserting in lieu thereof ‘purchases of property and services for amounts not in excess of the simplified acquisition threshold’;

(2) by striking out paragraph (2);

(3) by redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively;

(4) in paragraph (2), as so redesignated--

(A) by striking out ‘small purchase threshold’ and inserting in lieu thereof ‘simplified acquisition threshold’; and

(B) by striking out ‘small purchase procedures’ and inserting in lieu thereof ‘simplified procedures’; and

(5) in paragraph (3), as so redesignated, by striking out ‘small purchase procedures’ and inserting in lieu thereof ‘simplified procedures’.

(b) SOLICITATION CONTENT REQUIREMENT- Section 2305(a)(2) of such title is amended by striking out ‘small purchases)’ in the matter preceding subparagraph (A) and inserting in lieu thereof ‘a purchase for an amount not in excess of the simplified acquisition threshold)’.

(c) COST TYPE CONTRACTS- Section 2306(e)(2)(A) of such title is amended by striking out ‘small purchase threshold’ and inserting in lieu thereof ‘simplified acquisition threshold’.

SEC. 4072. CIVILIAN AGENCY ACQUISITIONS.

(1) in paragraph (1), by striking out ‘small purchases of property and services’ and inserting in lieu thereof ‘purchases of property and services for amounts not in excess of the simplified acquisition threshold’;

(2) by striking out paragraph (2);

(3) by redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively;

(4) in paragraph (2), as so redesignated--

(A) by striking out ‘small purchase threshold’ and inserting in lieu thereof ‘simplified acquisition threshold’; and

(5) in paragraph (3), as so redesignated, by striking out ‘small purchase procedures’ and inserting in lieu thereof ‘the simplified procedures’; and

(6) by striking out paragraph (5) and inserting in lieu thereof the following:

‘(4) In this subsection, the term ‘simplified acquisition threshold’ has the meaning given such term in section 4A of the Office of Federal Procurement Policy Act.’.

(b) SOLICITATION CONTENT REQUIREMENT- Section 303A(b) of such Act (41 U.S.C. 253a(b)) is amended by striking out ‘small purchases)’ in the matter preceding paragraph (1) and inserting in lieu thereof ‘a purchase for an amount not in excess of the simplified acquisition threshold)’.

(c) COST TYPE CONTRACTS- Section 304(b) of such Act (41 U.S.C. 254(b)) is amended in the third sentence by striking out ‘either $25,000’ and inserting in lieu thereof ‘either the simplified acquisition threshold’.

SEC. 4073. OFFICE OF FEDERAL PROCUREMENT POLICY ACT.

Section 19(a) of the Office of Federal Procurement Policy Act (41 U.S.C. 417(a)) is amended by striking out ‘procurements, other than small purchases,’ and inserting in lieu thereof ‘procurements for amounts in excess of the simplified acquisition threshold’.

PART V--REVISION OF REGULATIONS

SEC. 4081. REVISION REQUIRED.

(a) FEDERAL ACQUISITION REGULATION- (1) Not later than one year after the date of the enactment of this Act, the Federal Acquisition Regulatory Council established by section 25(a) of the Office of Federal Procurement Policy Act (41 U.S.C. 421(a)) shall--

(A) review the Federal Acquisition Regulation to identify regulations that are applicable to acquisitions in excess of a specified amount that is less than $100,000; and

(B) amend the regulations so identified as necessary to provide that such regulations do not apply to acquisitions that are not in excess of the simplified acquisition threshold.

(2) Paragraph (1) does not apply in the case of a regulation for which such an amendment would not be in the national interest, as determined by the Council.

(b) SUPPLEMENTAL REGULATIONS- Not later than 90 days after the date on which the review required by subsection (a) is completed, the head of each Federal agency that has issued regulations, policies, or procedures referred to in section 25(c)(2) of the Office of Federal Procurement Policy Act (41 U.S.C. 421(c)(2)) shall--

(1) identify any such regulation, policy, or procedure that is applicable to acquisitions in excess of a specified amount that is less than $100,000; and

(2) pursuant to section 22 of such Act (41 U.S.C. 418b), publish amendments to the regulations so identified as necessary to provide that such regulations, policies, and procedures do not apply to acquisitions that are not in excess of the simplified acquisition threshold.

(c) DEFINITIONS- In this section:

(1) The term ‘simplified acquisition threshold’ has the meaning given such term in section 4A of the Office of Federal Procurement Policy Act, as added by section 4001.

(2) The term ‘Federal agency’ has the meaning given such term in section 3(b) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 472(b)).

Subtitle B--Socioeconomic and Small Business Laws

SEC. 4101. PAYMENT PROTECTIONS FOR SUBCONTRACTORS AND SUPPLIERS.

(a) REGULATIONS-

(1) IN GENERAL- The Administrator for Federal Procurement Policy shall prescribe in regulations the requirements described in paragraph (2).

(2) PROCEDURES RELATING TO COMPLIANCE WITH PAYMENT TERMS- (A) Under procedures established in the regulations, upon the assertion by a subcontractor or supplier of a contractor performing a Government contract that the subcontractor or supplier has not been paid by the prime contractor in accordance with the payment terms of the subcontract, purchase order, or other agreement with the prime contractor, the contracting officer may determine the following:

(i) With respect to a construction contract, whether the contractor has made progress payments to the subcontractor or supplier in compliance with chapter 39 of title 31, United States Code.

(ii) With respect to a contract other than a construction contract, whether the contractor has made progress or other payments to the subcontractor or supplier in compliance with the terms of the subcontract, purchase order, or other agreement with the prime contractor.

(iii) With respect to either a construction contract or a contract other than a construction contract, whether the contractor has made final payment to the subcontractor or supplier in compliance with the terms of the subcontract, purchase order, or other agreement with the prime contractor.

(iv) With respect to either a construction contract or a contract other than a construction contract, whether any certification of payment of the subcontractor or supplier accompanying the contractor’s payment request to the Government is accurate.

(B) If the contracting officer determines that the prime contractor is not in compliance with any matter referred to in clause (i), (ii), or (iii) of subparagraph (A), the contracting officer may, under procedures established in the regulations--

(i) encourage the prime contractor to make timely payment to the subcontractor or supplier; or

(ii) reduce or suspend progress payments with respect to amounts due to the prime contractor.

(C) If the contracting officer determines that a certification referred to in clause (iv) of subparagraph (A) is inaccurate in any material respect, the contracting officer shall, under procedures established in the regulations, initiate appropriate administrative or other remedial action.

(D) This paragraph shall apply with respect to any Government contract, other than a Department of Defense contract, that is in effect on the date of promulgation of the regulations under this subsection or that is awarded after such date.

(b) INAPPLICABILITY TO CERTAIN CONTRACTS- The regulations prescribed under this section shall not apply to the following contracts:

(1) A contract that is for an amount not in excess of the simplified acquisition threshold (within the meaning of section 4A of the Office of Federal Procurement Policy Act).

(2) A contract for the acquisition of commercial items (as that term is defined in section 315 of the Federal Property and Administrative Services Act of 1949).

(c) REGULATIONS DEADLINES- (1) The Administrator for Federal Procurement Policy shall publish proposed regulations under subsection (a) not later than 180 days after the date of the enactment of this Act.

(2) The Administrator shall publish final regulations under subsection (a) not later than 270 days after the date of the enactment of this Act.

(d) AMENDMENTS TO ARMED SERVICES PROVISION- Section 806 of the National Defense Authorization Act for Fiscal Years 1992 and 1993 (Public Law 102-190; 10 U.S.C. 2301 note) is amended by striking out subsection (c) and inserting in lieu thereof the following:

‘(c) INAPPLICABILITY TO CERTAIN CONTRACTS- The regulations prescribed under this section shall not apply to the following contracts:

‘(1) A contract that is for an amount not in excess of the simplified acquisition threshold (within the meaning of section 4A of the Office of Federal Procurement Policy Act).

‘(2) A contract for the acquisition of commercial items (as that term is defined in section 2281 of title 10, United States Code).’.

SEC. 4102. SMALL BUSINESS PROCUREMENT ADVISORY COUNCIL.

(a) ESTABLISHMENT- There is hereby established an interagency council to be known as the ‘Small Business Procurement Advisory Council’ (hereinafter in this section referred to as the ‘Council’).

(b) DUTIES- The duties of the Council are--

(1) to serve as a forum for discussion of issues and problems relating to, and ideas for improvement of, small business procurement matters within the Federal Government;

(2) to provide information to other departments and agencies of the Federal Government about small business procurement; and

(3) to issue advisory reports to the Small Business Administration and the Office of Federal Procurement Policy on small business procurement matters.

(c) MEMBERSHIP- The Council shall be composed of the following members:

(1) The Administrator of the Small Business Administration (or the designee of the Administrator).

(2) The Administrator for Federal Procurement Policy (or the designee of the Administrator).

(3) The Director of the Minority Business Development Agency.

(4) The head of each Office of Small and Disadvantaged Business Utilization in each Federal agency having procurement powers.

(d) CO-CHAIRMEN- The Council shall be co-chaired by the Administrator of the Small Business Administration and the Administrator for Federal Procurement Policy.

(e) MEETINGS- The Council shall meet at the call of the chairmen, but not less often than four times a year and once each quarter.

(f) DIRECTOR- The Chief Counsel for Advocacy of the Small Business shall serve as the director of the Council. The director may not vote on matters before the council except in the case of a tie vote among the members. The duties of the director shall be determined by the chairmen of the Council. The Chief Counsel for Advocacy shall receive no additional pay by reason of the counsel’s service as director of the Council.

(g) ANNUAL REPORT- Not later than 30 days after the end of each fiscal year, the Council shall submit to Congress a report detailing the activities of the Council in the preceding fiscal year in carrying out this section.

Subtitle C--Miscellaneous Acquisition Laws

SEC. 4151. RESTRICTION ON USE OF NONCOMPETITIVE PROCEDURES FOR PROCUREMENT FROM A SPECIFIED SOURCE.

(a) ARMED SERVICES ACQUISITIONS- Section 2304 of title 10, United States Code, is further amended--

(1) in subsection (c)(5), by inserting ‘subject to subsection (k),’ after ‘(5)’; and

(2) by adding at the end the following new subsection:

‘(k)(1) It is the policy of Congress that no legislation should be enacted that requires a procurement by an agency to be made from a specified non-Federal Government source.

‘(2) A provision of law may not be construed as requiring a procurement by an agency to be made from a specified non-Federal Government source unless that provision of law--

‘(A) specifically refers to this subsection;

‘(B) specifically identifies the particular non-Federal Government source from which the procurement is to be made; and

‘(C) specifically states that the procurement from that source is required by such provision of law in contravention of the policy set forth in paragraph (1).’.

SEC. 4152. REPEAL OF OBSOLETE PROVISION.

TITLE V--STANDARDS OF CONDUCT

SEC. 5001. CONTRACTING FUNCTIONS PERFORMED BY FEDERAL PERSONNEL.

(a) AMENDMENT OF OFPP ACT- The Office of Federal Procurement Policy Act, as amended by section 1091, is further amended by inserting after section 22 the following new section 23:

‘SEC. 23. CONTRACTING FUNCTIONS PERFORMED BY FEDERAL PERSONNEL.

‘(a) LIMITATION ON USE OF CONTRACT ADVISORY AND ASSISTANCE SERVICES- The head of an agency may not provide for an evaluation or analysis of any aspect of a proposal submitted for an acquisition by that agency to be conducted by a person who is not an employee of an executive agency or a member of the Armed Forces unless the agency head determines that employees or members with adequate training and capability to perform the evaluation or analysis are not readily available within the agency or any other executive agency.

‘(b) COMPLIANCE WITH FAR STANDARDS- In the administration of this section, the head of each executive agency shall comply with the Federal Acquisition Regulation in determining whether expertise is readily available and in determining the standards of adequate training and capability of employees and members of the Armed Forces to conduct acquisitions.

‘(c) DEFINITION- For purposes of this section, the term ‘employee’ has the meaning given such term by section 2105 of title 5, United States Code.’.

(A) what actions Federal agencies are required to take to determine whether expertise is readily available within the Federal Government before contracting for advisory and technical services to conduct acquisitions; and

(B) the manner in which Federal employees with expertise may be shared with agencies needing expertise for such acquisitions.

(2) DEFINITION- In paragraph (1), the term ‘employee’ has the meaning given such term by section 2105 of title 5, United States Code.

(3) DEADLINE- The guidance and regulations required by paragraph (1) shall be provided and promulgated not later than 180 days after the date of the enactment of this Act.

(1) by striking out ‘30 days’ in subsection (a) and inserting in lieu thereof ‘45 days’; and

(2) by adding at the end of subsection (d) the following new paragraph:

‘(3) A policy, regulation, procedure, or form described in subsection (a) may (notwithstanding that subsection) take effect earlier than 45 days after the date of publication thereof in the Federal Register pursuant to subsection (b) if the officer authorized to issue the procurement policy, regulation, procedure, or form determines that compelling circumstances make compliance with the 45-day requirement under subsection (a) impracticable. However, the policy, regulation, procedure, or form may not take effect earlier than 30 days after the publication date except as provided in paragraph (1).’.

SEC. 5004. REPEAL OF SUPERSEDED AND OBSOLETE LAWS.

(a) REPEAL- The following sections of title 10, United States Code, are repealed: sections 2207, 2397, 2397a, 2397b, and 2397c.

(b) CLERICAL AMENDMENTS-

(1) The table of sections at the beginning of chapter 131 of such title is amended by striking out the item relating to section 2207.

(2) The table of sections at the beginning of chapter 141 of such title is amended by striking out the items relating to sections 2397, 2397a, 2397b, and 2397c.

TITLE VI--DEFENSE TRADE AND COOPERATION

SEC. 6001. EXCEPTION TO BUY AMERICAN ACT FOR MICRO-PURCHASES.

Section 2 of title III of the Act of March 3, 1933 (41 U.S.C. 10a), commonly referred to as the ‘Buy American Act’, is amended by adding at the end the following: ‘This section shall not apply to manufactured articles, materials, or supplies procured under any contract the award value of which is less than or equal to the micro-purchase threshold under section 4B of the Office of Federal Procurement Policy Act.’.

SEC. 6002. POLICY ON PURCHASE OF FOREIGN GOODS.

(a) IN GENERAL- Section 2533 of title 10, United States Code, is amended to read as follows:

‘Sec. 2533. Policy on the purchase of foreign goods

‘(a) DETERMINATION UNDER BUY AMERICAN ACT- In determining whether application of title III of the Act of March 3, 1933 (41 U.S.C. 10a et seq.), popularly known as the ‘Buy American Act’, is inconsistent with the public interest, the Secretary of Defense shall give adequate consideration to the following:

‘(1) The bids or proposals of small business firms in the United States which have offered to furnish American goods.

‘(2) The bids or proposals of all other firms in the United States which have offered to furnish American goods.

‘(3) The balance of payments of the United States.

‘(4) The cost of shipping goods which are other than American goods.

‘(5) Any duty, tariff, or surcharge which may enter into the cost of using goods which are other than American goods.

‘(6) Coordination of acquisition activities of the Department of Defense with obligations contained in international agreements and with the acquisition activities of major United States allies.

‘(7) The need to ensure that the Department of Defense has access to advanced state-of-the-art commercial technology.

‘(8) The need to protect the national technology and industrial base, to preserve and enhance the national technology employment base, and to provide for a defense mobilization base.

‘(9) The need to maintain the same source of supply for spare and replacement parts either for an end item that qualifies as an American good or to maintain or foster the integration of the military and commercial industrial base.

‘(10) National security interests of the United States.

‘(b) In this section, the term ‘goods which are other than American goods’ means--

‘(1) an end product that is not mined, produced, or manufactured in the United States; or

‘(2) an end product that is manufactured in the United States but which includes components mined, produced, or manufactured outside the United States the aggregate cost of which exceeds the aggregate cost of the components of such end product that are mined, produced, or manufactured in the United States.’.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of subchapter V of chapter 148 of such title is amended by striking out the item relating to section 2533 and inserting in lieu thereof the following:

‘2533. Policy on purchase of foreign goods.’.

SEC. 6003. CONSOLIDATION OF LIMITATIONS ON PROCUREMENT OF GOODS OTHER THAN AMERICAN GOODS.

Section 2534 of title 10, United States Code, is amended--

(1) by striking out subsections (a) through (f);

(2) by redesignating subsection (g), as added by section 4032, as subsection (d); and

(3) by inserting after the section heading the following:

‘(a) LIMITATION ON CERTAIN PROCUREMENTS- The Secretary of Defense may procure the following items only if they are manufactured by an entity that is part of the national technology and industrial base (as defined in section 2491(1) of this title):

‘(1) BUSES- Multipassenger motor vehicles (buses).

‘(2) CHEMICAL WEAPONS ANTIDOTE- Chemical weapons antidote contained in automatic injectors (or components for such injectors), but only if the company that manufactures the item not only manufactures it in the United States but also meets the following requirements:

‘(A) The company is an existing producer under the industrial preparedness program at the time the contract is awarded.

‘(B) The company has received all required regulatory approvals.

‘(C) The company has the plant, equipment, and personnel to perform the contract in existence in the United States at the time the contract is awarded.

‘(3) VALVES AND MACHINE TOOLS- (A) Items in the following categories:

‘(i) Powered and non-powered valves in Federal Supply Classes 4810 and 4820 used in piping for naval surface ships and submarines.

‘(B) Contracts for the procurement of items described in subparagraph (A) include contracts--

‘(i) for the use of such items in any property under the control of the Department of Defense, including Government-owned, contractor-operated facilities; and

‘(ii) entered into by contractors on behalf of the Department of Defense for the purposes of providing such items to other contractors as Government-furnished equipment.

‘(C) In any case in which a contract for items described in subparagraph (A) includes the procurement of more than one Federal Supply Class of machine tools or machine tools and accessories, each supply class shall be evaluated separately for purposes of determining whether the limitation in this subsection applies.

‘(D) This paragraph is effective through fiscal year 1996.

‘(4) AIR CIRCUIT BREAKERS- Air circuit breakers for naval vessels.

‘(5) SONOBUOYS- Sonobuoys.

‘(6) BALL BEARINGS AND ROLLER BEARINGS- Ball bearings and roller bearings, in accordance with subpart 225.71 of part 225 of the Defense Federal Acquisition Regulation Supplement, as in effect on October 23, 1992. This paragraph is effective through fiscal year 1995.

‘(b) EXCEPTIONS- The Secretary of Defense may waive the limitation in subsection (a) with respect to the procurement of an item listed in that subsection if the Secretary determines that any of the following apply:

‘(1) Application of the limitation would cause unreasonable costs or delays to be incurred.

‘(2) United States producers of the item would not be jeopardized by competition from a foreign country and that country does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in that country.

‘(3) Application of the limitation would impede cooperative programs entered into between the Department of Defense and a foreign country and that country does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in that country.

‘(4) Satisfactory quality items manufactured by an entity that is part of the national technology and industrial base (as defined in section 2491(1) of this title) are not available.

‘(5) Application of the limitation would result in the existence of only one source for the item that is an entity that is part of the national technology and industrial base (as defined in section 2491(1) of this title).

‘(6) The procurement is for an amount less than the simplified acquisition threshold and simplified purchase procedures are being used.

‘(7) Application of the limitation is not in the national security interests of the United States.

‘(8) Application of the limitation would adversely affect a United States company.

‘(c) PRINCIPLE OF CONSTRUCTION WITH FUTURE LAWS- A provision of law may not be construed as modifying or superseding the provisions of this section, or as requiring funds to be limited, or made available, by the Secretary of Defense to a particular domestic source by contract, unless that provision of law--

‘(1) specifically refers to this section;

‘(2) specifically states that such provision of law modifies or supersedes the provisions of this section; and

‘(3) specifically identifies the particular domestic source involved and states that the contract to be awarded pursuant to such provision of law is being awarded in contravention of this section.’.

SEC. 6004. INTERNATIONAL COOPERATIVE AGREEMENTS.

(a) DEFENSE INTERNATIONAL AGREEMENTS-

(1) TERMINOLOGY REVISIONS- Section 2531 of title 10, United States Code, is amended--

(A) in the subsection captions for subsections (a) and (c), by striking out ‘MOUS AND RELATED’ and inserting in lieu thereof ‘INTERNATIONAL’;

(B) in subsection (a), by striking out ‘proposed memorandum of understanding, or any existing or proposed agreement related to a memorandum of understanding,’ in the matter preceding paragraph (1) and inserting in lieu thereof ‘proposed international agreement, including a memorandum of understanding,’;

(C) by striking out ‘memorandum of understanding or related agreement’ each place it appears and inserting in lieu thereof ‘international agreement’;

(D) in subsection (b), by striking out ‘memorandum or related agreement’ each place it appears in the second sentence and inserting in lieu thereof ‘international agreement’; and

(E) in subsection (c)--

(i) by striking out ‘A’ after ‘AGREEMENTS- ’ and inserting in lieu thereof ‘An’; and

(ii) by striking out ‘memorandum or agreement’ and inserting in lieu thereof ‘international agreement’.

(2) EXPANDED SCOPE OF AGREEMENTS- Subsection (a) of such section is further amended by striking out ‘research, development, or production’ in the matter preceding paragraph (1) and inserting in lieu thereof ‘research, development, production, or logistics support’.

(3) CLERICAL AMENDMENTS-

(A) SECTION HEADING- The heading of such section is amended to read as follows:

‘Sec. 2531. Defense international agreements’.

(B) TABLE OF SECTIONS- The item relating to such section in the table of sections at the beginning of subchapter V of chapter 148 of such title is amended to read as follows:

‘2531. Defense international agreements.’.

(b) ADDITION TO DEFINITION OF COOPERATIVE PROJECT- Section 2350i(c)(1) of title 10, United States Code, is amended in subparagraph (B)--

(1) by striking out ‘or’ at the end of clause (ii);

(2) by redesignating clause (iii) as clause (iv); and

(3) by inserting after clause (ii) the following:

‘(iii) modifying existing military equipment to meet United States military requirements; or’.

SEC. 6005. MISCELLANEOUS REPEALS.

(a) REPEAL OF BUY AMERICAN REQUIREMENT FOR POLICY GUIDANCE- Title III of the Act of March 3, 1933 (41 U.S.C. 10a et seq.), commonly referred to as the ‘Buy American Act’, is amended in section 4(g) (41 U.S.C. 10b-1(g)) by striking out paragraphs (2)(C) and (3).

(c) REPEAL OF STUDIES OF BUY AMERICAN ACT WAIVERS- Section 306 of the Trade Agreements Act of 1979 (19 U.S.C. 2516), relating to studies of certain employment effects and procurement effects of a waiver of title III of the Act of March 3, 1933 (41 U.S.C. 10a et seq.), commonly referred to as the ‘Buy American Act’, is repealed.

TITLE VII--COMMERCIAL ITEMS

Subtitle A--Armed Services Acquisitions

SEC. 7001. ESTABLISHMENT OF NEW CHAPTER IN TITLE 10.

(a) ESTABLISHMENT- Part IV of subtitle A of title 10, United States Code, is amended by inserting before chapter 137 the following new chapter 136:

‘CHAPTER 136--PROCUREMENT OF COMMERCIAL ITEMS

‘Sec.

‘2281. Definitions.

‘2282. Preference for acquisition of commercial items.

‘2283. Pricing documentation for commercial items.

‘2284. Regulations; required terms and conditions.

‘2285. Principle of construction with future laws.

‘2286. Inapplicability of certain provisions of law.’.

(b) CLERICAL AMENDMENT- The tables of chapters at the beginning of subtitle A of title 10, United States Code, and the beginning of part IV of such subtitle are amended by inserting before the item relating to chapter 137 the following new item:

2281’.

SEC. 7002. DEFINITIONS.

Chapter 136 of title 10, United States Code, as added by section 7001, is amended by adding after the table of sections the following:

‘Sec. 2281. Definitions

‘In this chapter:

‘(1) The term ‘commercial item’ means any of the following:

‘(A) Any item of a type customarily used in the course of normal business operations for other than Federal Government purposes, that--

‘(i) has been sold, leased, or licensed to the general public or to domestic State or local government entities; or

‘(ii) has been offered for sale, lease, or license to the general public or to domestic State or local government entities.

‘(B) An item intended to be used in the course of normal business operations for other than Federal Government purposes that is not yet available in the commercial marketplace, but will be available in the commercial marketplace in time to satisfy the delivery requirements under a Federal Government solicitation.

‘(C) Any item that, but for--

‘(i) modifications of a type customarily available in the commercial marketplace, or

‘(ii) minor modifications made to meet Federal Government requirements,

would satisfy the criteria in subparagraph (A) or (B).

‘(D) Any combination of items meeting the requirements of subparagraph (A), (B), or (C) that are of a type customarily combined and sold in combination to the general public.

‘(E) Services offered and sold competitively, in significant quantities, in the commercial marketplace at established catalog prices or standard rates and under standard commercial terms and conditions.

‘(F) Any item, combination of items, or service referred to in subparagraphs (A) through (E), notwithstanding the fact that the item, combination of items, or service is transferred between or among separate divisions, subsidiaries, or affiliates of a contractor.

‘(2) The term ‘nondevelopmental item’ means any of the following:

‘(A) Any previously developed item of supply that is in use by a department or agency of the United States, a State or local government, or a foreign government with which the United States has a mutual defense cooperation agreement.

‘(B) Any item of supply described in subparagraph (A) that requires only minor modification or modification of the type customarily available in the commercial marketplace in order to meet the requirements of the procuring department or agency.

‘(C) Any item of supply currently being produced that does not meet the requirements of subparagraph (A) or (B) solely because the item--

‘(i) is not yet in use; or

‘(ii) is not yet available in the commercial marketplace.

‘(3) The term ‘component’ means any item supplied to the Federal Government as part of an end item or of another component.

‘(4) The term ‘commercial component’ means any component that is a commercial item.

‘(5) The term ‘head of an agency’ means the Secretary of Defense, the Secretary of Transportation, and the Administrator of the National Aeronautics and Space Administration.

‘(6) The term ‘agency’ means the Department of Defense, the Coast Guard, and the National Aeronautics and Space Administration.’.

SEC. 7003. PREFERENCE FOR ACQUISITION OF COMMERCIAL ITEMS.

(a) IN GENERAL- Chapter 136 of title 10, United States Code, as amended by section 7002, is further amended by adding after section 2281 the following new section:

‘Sec. 2282. Preference for acquisition of commercial items

‘(a) PREFERENCE- (1) The head of an agency shall ensure that, to the maximum extent practicable--

‘(A) requirements of the agency with respect to a procurement of supplies are stated in terms of--

‘(i) functions to be performed,

‘(ii) performance required, or

‘(iii) essential physical characteristics;

‘(B) such requirements are defined so that commercial items may be procured to fulfill such requirements; and

‘(C) such requirements are fulfilled through the procurement of commercial items.

‘(2) The head of an agency shall ensure that, to the maximum extent practicable, requirements of the agency with respect to a procurement of supplies are defined so that nondevelopmental items may be procured to fulfill such requirements in any case in which commercial items that fulfill the requirements of the agency are not available.

‘(b) IMPLEMENTATION- The head of each agency shall ensure that procurement officials in the agency, to the maximum extent practicable--

‘(1) acquire commercial items to meet the needs of the agency;

‘(2) require prime contractors and subcontractors at all levels under the contracts of the agency to incorporate commercial items as components of items supplied to the agency;

‘(3) modify requirements in appropriate cases to ensure that the requirements can be met by commercial items;

‘(4) state specifications in terms that enable and encourage bidders and offerors to supply commercial items in response to the solicitations of the agency;

‘(5) revise the procurement policies, practices, and procedures of the agency that are not required by law to reduce any impediments in those policies, practices, and procedures to the acquisition of commercial items; and

‘(6) require training of appropriate personnel in the acquisition of commercial items.

‘(c) EXISTING OR PRIOR SOURCES OF NONDEVELOPMENTAL ITEMS- (1) Notwithstanding subsection (a), the Secretary of Defense, the Secretary of a military department, or the head of a Defense Agency may, until five years after the date of the enactment of the Federal Acquisition Improvement Act of 1994, determine that it is in the Government’s interests to permit existing or prior sources of nondevelopmental items to participate in a competition for a commercial item in a case in which a nondevelopmental item will compete with a commercial item under the same terms, conditions, and evaluation and award criteria.

‘(2) Nondevelopmental items furnished by an existing or prior source that must be modified to meet the requirements of a solicitation for commercial items may be offered under such a solicitation, but only in a case in which the modifications--

‘(A) are necessary to comply with the Government’s solicitation requirements; and

‘(B) do not significantly alter the function or essential physical characteristics of the items to be supplied.

‘(3) The policies, procedures, solicitation provisions, and contract clauses applicable to commercial items under this chapter also shall apply to nondevelopmental items furnished by an existing or prior source that is permitted to participate in a competition conducted under this title.

‘(d) PRELIMINARY MARKET RESEARCH- (1) The head of an agency shall conduct market research appropriate to the circumstances--

‘(A) before developing new specifications for a procurement by the agency; and

‘(B) before soliciting bids or proposals for a contract in excess of the simplified acquisition threshold.

‘(2) The head of the agency shall use the results of market research to determine whether there are commercial items available that--

‘(A) meet the requirements of the agency;

‘(B) could be modified to meet such requirements; or

‘(C) could meet such requirements if those requirements were modified to a reasonable extent.’.

(b) REPEAL OF SUPERSEDED PROVISION- Section 2325 of title 10, United States Code, is repealed. The table of sections at the beginning of chapter 137 of such title is amended by striking out the item relating to section 2325.

SEC. 7004. PRICING DOCUMENTATION FOR COMMERCIAL ITEMS.

(a) IN GENERAL- Chapter 136 of title 10, United States Code, as amended by section 7003, is further amended by adding after section 2282 the following new section:

‘Sec. 2283. Pricing documentation for commercial items

‘(a) REQUIREMENT FOR DETERMINATION OF PRICE REASONABLENESS- (1) When the price of a commercial item is based on adequate price competition or on established catalog or market prices of items sold in sufficient quantities to the general public, the contracting officer shall presume that the price contained in the most advantageous evaluated offer (price and all other factors considered) received in response to a solicitation, or a price based on established catalog or market prices, is fair and reasonable unless the contracting officer has information that the price is not fair and reasonable. Before the award of a contract for which price is based on catalog or market prices, the contracting officer shall make reasonable efforts to establish the currency and accuracy of such prices.

‘(2) When the price of a commercial item is not presumed fair and reasonable under paragraph (1), the contracting officer shall use price analysis to determine whether the price is fair and reasonable.

‘(3) When required by the contracting officer before award of a contract or contract definitization, the offeror shall promptly furnish documentation, in the form regularly maintained in commercial operations, adequate to demonstrate the market price of the item or items or otherwise needed to establish a fair and reasonable price. All documentation received from an offeror, if not otherwise in the public domain and if requested by the offeror and marked as proprietary, shall be treated by the Government as confidential and exempt from disclosure to the extent permitted by section 552 of title 5. In this paragraph, the term ‘contract definitization’ means agreement to contractual terms, specifications, and price.

‘(4) In any case in which a contracting officer is able to determine under paragraph (1) or (2) that a price is reasonable, the procurement shall be exempt from section 2306a of this title.

‘(5) In any case in which a contracting officer is unable to determine under paragraph (1) or (2) that a price is reasonable, the contracting officer may require cost or pricing data under section 2306a of this title.

‘(b) GOVERNMENT’S RIGHT TO AUDIT- (1) The United States shall have the right to audit all documentation provided by an offeror under subsection (a)(3) and all books and records of the offeror directly relating to such documentation, except that, if the offeror has made no representation as to the completeness of the documentation supplied, the United States shall have no right to audit for completeness. When contract price is established under this section, the United States shall have no audit rights other than those set out in this subsection.

‘(2) The right under this subsection shall expire--

‘(A) one year after the date of commencement of performance of the contract, or one year after the date of commencement of performance of the modification of the contract, with respect to which the information was provided; or

‘(B) on such other date agreed upon by the parties at the time of contract award or contract definitization.’.

(b) CROSS REFERENCE- Section 2306a of title 10, United States Code, is amended by adding at the end the following new subsection:

‘(h) ADDITIONAL EXCEPTIONS REGARDING COMMERCIAL ITEMS- For provisions relating to additional exceptions for procurements of commercial items, see section 2283 of this title.’.

SEC. 7005. REGULATIONS ON ACQUISITION OF COMMERCIAL ITEMS.

(a) IN GENERAL- Chapter 136 of title 10, United States Code, as amended by section 7004, is further amended by adding after section 2283 the following new section:

‘Sec. 2284. Regulations; required terms and conditions

‘(a) IN GENERAL- The head of each agency shall prescribe regulations to implement this chapter in that agency. Such regulations shall be developed in consultation with the Administrator for Federal Procurement Policy. The regulations shall include provisions implementing the preference for commercial items set out in section 2282 of this title.

‘(b) TERMS AND CONDITIONS- The regulations prescribed under subsection (a) shall contain a set or sets of terms and conditions to be included in contracts for the acquisition of commercial items. Such terms and conditions shall, to the maximum extent practicable, include only those contract clauses that are determined by the head of the agency to be--

‘(1) required to implement provisions of law applicable to commercial item acquisitions; or

‘(2) consistent with standard commercial practice.

‘(c) TERMS AND CONDITIONS FOR COMPONENTS- Such regulations shall provide that a prime contractor furnishing commercial items or items other than commercial items as items or components shall not be required to apply to any of its divisions, subsidiaries, or affiliates or any of its subcontractors or suppliers that are furnishing commercial items as components any clause, term, or condition except those determined by the head of the agency to be--

‘(1) required to implement provisions of law applicable to subcontractors furnishing commercial items; or

‘(2) determined to be consistent with standard commercial practice.

‘(d) MARKET ACCEPTANCE- The regulations prescribed under subsection (a) shall provide that, under appropriate conditions, the head of the agency may require an offeror to demonstrate, as a condition for being considered responsive, that the items offered meet, among other criteria, market acceptance criteria, unless such item has been satisfactorily supplied to an executive agency under current or recent contracts for the same or similar requirements.

‘(e) USE OF FIXED PRICE CONTRACTS- The regulations prescribed under subsection (a) shall include a requirement that firm, fixed price contracts, or fixed price contracts with economic price adjustment provisions, be used for the acquisition of commercial items and components.

‘(f) TERM OF CONTRACTS- The regulations prescribed under subsection (a) shall provide that, to the extent practicable, contracts for acquisition of commercial items shall not require contract performance for a term longer than customary industry practice for the item being acquired. A contracting officer may include in a contract provisions for economic price adjustment if an extended period of performance under the contract cannot be avoided.

‘(1) permit, to the maximum extent practicable, a contractor under a commercial items acquisition to use the existing quality assurance system of the contractor as a substitute for compliance with an otherwise applicable requirement for the Government to inspect or test the commercial items before the contractor’s tender of those items for acceptance by the Government;

‘(2) require that, to the maximum extent practicable, the head of the agency take advantage of warranties (including extended warranties) offered by offerors of commercial items and use such warranties for the repair and replacement of commercial items; and

‘(3) set forth guidance regarding the use of past performance of commercial items and sources as a factor in contract award decisions.’.

(b) DEFENSE CONTRACT CLAUSES-

(1) REPEAL OF DOD AUTHORITY- Section 824(b) of the National Defense Authorization Act for Fiscal Years 1990 and 1991 (Public Law 101-189; 10 U.S.C. 2325 note) is repealed.

(2) SAVINGS PROVISION- Notwithstanding subsections (b) and (c) of section 2284 of title 10, U.S.C., as added by subsection (a), a contract of the Department of Defense entered into before October 1, 1994, and a subcontract entered into before such date under such a contract, may include clauses developed pursuant to paragraphs (2) and (3) of section 824(b) of the National Defense Authorization Act for Fiscal Years 1990 and 1991 (Public Law 101-189; 10 U.S.C. 2325 note).

SEC. 7006. PRINCIPLE OF CONSTRUCTION WITH FUTURE LAWS.

Chapter 136 of title 10, United States Code, as amended by section 7005, is further amended by adding after section 2284 the following new section:

‘Sec. 2285. Principle of construction with future laws

‘A provision of law enacted after the date of the enactment of the Federal Acquisition Improvement Act of 1994 may not be construed as modifying or superseding any provision of this chapter unless that provision of law specifically refers to this section and specifically states that such provision of law modifies or supersedes such provision of this chapter.’.

SEC. 7007. INAPPLICABILITY OF CERTAIN PROVISIONS OF LAW.

(a) INAPPLICABLE PROVISIONS- Chapter 136 of title 10, United States Code, as amended by section 7006, is further amended by adding after section 2285 the following new section:

‘Sec. 2286. Inapplicability of certain provisions of law

‘(a) PROVISIONS INAPPLICABLE TO PRIME CONTRACTORS- The following provisions of law (and regulations prescribed under such provisions) shall not apply to any contract entered into by an agency for the procurement of a commercial item:

‘(1) Section 2306(b) of this title (relating to prohibition on contingent fees).

‘(2) Section 2320 of this title (relating to rights in technical data).

‘(3) Section 2321 of this title (relating to validation of proprietary data restrictions).

‘(4) Section 2324 of this title (relating to allowable costs).

‘(5) Section 2384(b) of this title (relating to requirement to identify suppliers and sources of supplies).

‘(6) Section 2393(d) of this title (relating to prohibition against doing business with certain offerors or contractors).

‘(7) Section 2402 of this title (relating to prohibition on limitation of subcontractor direct sales).

‘(8) Section 2408(a) of this title (relating to prohibition on persons convicted of defense contract-related felonies).

‘(9) Section 2410b of this title (relating to contractor inventory accounting system standards).

‘(10) Section 843 of Public Law 103-160 (107 Stat. 1720) (relating to reports of defense contractors of dealings with terrorist countries).

‘(13) The Drug-Free Workplace Act of 1988 (subtitle D of title V of Public Law 100-690; 41 U.S.C. 701 et seq.).

‘(b) PROVISIONS INAPPLICABLE TO SUBCONTRACTORS AND OTHER ENTITIES-

‘(1) LAWS INAPPLICABLE- The following provisions of law (and regulations prescribed under such provisions) shall not apply to any entity described in paragraph (2):

‘(A) Each provision of law listed under subsection (a).

‘(B) Sections 2533 and 2534 of this title (relating to goods which are other than American goods).

‘(C) The Act of March 3, 1933, commonly referred to as the ‘Buy American Act’ (41 U.S.C. 10a-10c).

‘(2) COVERED ENTITIES- Paragraph (1) applies to each of the following:

‘(A) Any division, subsidiary, or affiliate of a prime contractor (other than the division, subsidiary, or affiliate that is contracting with the Government under the prime contract) or of a subcontractor of a prime contractor, if such division, subsidiary, or affiliate is furnishing a commercial item to the prime contractor or subcontractor for purposes of carrying out the prime contract or subcontract.

‘(B) Any subcontractor or supplier of a prime contractor, if the subcontractor or supplier is furnishing a commercial item to the prime contractor for purposes of carrying out the prime contract.

‘(c) DEFINITION- In this section, the term ‘prime contractor’ means a person under contract directly with the Department of Defense.’.

(a) INAPPLICABILITY OF REQUIREMENT FOR CONTRACT CLAUSE REGARDING CONTINGENT FEES- Section 2306(b) of title 10, United States Code, as amended by section 4032(a), is further amended by inserting before the period at the end of the sentence added by section 4032(a) the following: ‘or to a contract for the acquisition of commercial items’.

(b) INAPPLICABILITY OF REGULATIONS ON RIGHTS IN TECHNICAL DATA- Section 2320 of title 10, United States Code, is amended by adding at the end the following new subsection:

‘(e) The regulations prescribed under subsection (a) shall not apply to contracts for the purchase of commercial items (as defined in section 2281 of this title).’.

(c) INAPPLICABILITY OF REQUIREMENT FOR VALIDATION OF PROPRIETARY DATA RESTRICTIONS- Section 2321(a) of title 10, United States Code, is amended by inserting before the period at the end the following: ‘, other than a contract for supplies or services that are commercial items (as defined in section 2281 of this title)’.

(d) INAPPLICABILITY OF REQUIREMENT TO IDENTIFY SUPPLIERS AND SOURCES OF SUPPLIES- Paragraph (2) of section 2384(b) of title 10, United States Code, is amended to read as follows:

‘(2) The regulations prescribed pursuant to paragraph (1) do not apply to a contract that requires the delivery of supplies that are commercial items, as defined in section 2281 of this title.’.

(e) INAPPLICABILITY OF PROHIBITION AGAINST DOING BUSINESS WITH CERTAIN OFFERORS OR CONTRACTORS- Section 2393(d) of title 10, United States Code, as amended by section 4032(d), is further amended by adding at the end the following: ‘The requirement shall not apply in the case of a subcontract for the acquisition of commercial items (as defined in section 2281 of this title).’.

(f) INAPPLICABILITY OF PROHIBITION ON LIMITATION OF SUBCONTRACTOR DIRECT SALES- Section 2402 of title 10, United States Code, as amended by section 4032(e), is further amended by adding at the end the following new subsection:

‘(d)(1) An agreement between the contractor in a contract for the acquisition of commercial items and a subcontractor under such contract that restricts sales by such subcontractor directly to persons other than the contractor may not be considered to unreasonably restrict sales by that subcontractor to the United States in violation of the provision included in such contract pursuant to subsection (a) if the agreement does not result in the United States being treated differently with regard to the restriction than any other prospective purchaser of such commercial items from that subcontractor.

‘(2) In paragraph (1), the term ‘commercial item’ has the meaning given such term in section 2281 of this title.’.

(g) INAPPLICABILITY OF PROHIBITION ON PERSONS CONVICTED OF DEFENSE-RELATED FELONIES- Section 2408(a) of title 10, United States Code, is amended by adding at the end of paragraph (4), as added by section 4032(f), the following: ‘The term does not include a contract for the purchase of commercial items (as defined in section 2281 of this title).’.

(h) INAPPLICABILITY OF CONTRACTOR INVENTORY ACCOUNTING SYSTEM STANDARDS- Section 2410b of title 10, United States Code, is amended by adding after subsection (b), as added by section 4032(g), the following:

‘(c) The regulations prescribed pursuant to subsection (a) shall not apply to a contract for the purchase of commercial items (as defined in section 2281 of this title).’.

Subtitle B--Civilian Agency Acquisitions

SEC. 7011. DEFINITIONS.

Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.), as amended by section 1554, is further amended by adding after section 314 the following new section:

‘SEC. 315. DEFINITIONS RELATING TO PROCUREMENT OF COMMERCIAL ITEMS.

‘As used in this title:

‘(1) The term ‘commercial item’ means any of the following:

‘(A) Any item of a type customarily used in the course of normal business operations for other than Federal Government purposes, that--

‘(i) has been sold, leased, or licensed to the general public or to domestic State or local government entities; or

‘(ii) has been offered for sale, lease, or license to the general public or to domestic State or local government entities.

‘(B) An item intended to be used in the course of normal business operations for other than Federal Government purposes that is not yet available in the commercial marketplace, but will be available in the commercial marketplace in time to satisfy the delivery requirements under a Federal Government solicitation.

‘(C) Any item that, but for--

‘(i) modifications of a type customarily available in the commercial marketplace, or

‘(ii) minor modifications made to meet Federal Government requirements,

would satisfy the criteria in subparagraph (A) or (B).

‘(D) Any combination of items meeting the requirements of subparagraph (A), (B), or (C) that are of a type customarily combined and sold in combination to the general public.

‘(E) Services offered and sold competitively, in significant quantities, in the commercial marketplace at established catalog prices or standard rates and under standard commercial terms and conditions.

‘(F) Any item, combination of items, or service referred to in subparagraphs (A) through (E), notwithstanding the fact that the item, combination of items, or service is transferred between or among separate divisions, subsidiaries, or affiliates of a contractor.

‘(2) The term ‘nondevelopmental item’ means any of the following:

‘(A) Any previously developed item of supply that is in use by a department or agency of the United States, a State or local government, or a foreign government with which the United States has a mutual defense cooperation agreement.

‘(B) Any item of supply described in subparagraph (A) that requires only minor modification or modification of the type customarily available in the commercial marketplace in order to meet the requirements of the procuring department or agency.

‘(C) Any item of supply currently being produced that does not meet the requirements of subparagraph (A) or (B) solely because the item--

‘(i) is not yet in use; or

‘(ii) is not yet available in the commercial marketplace.

‘(3) The term ‘component’ means any item supplied to the Federal Government as part of an end item or of another component.

‘(4) The term ‘commercial component’ means any component that is a commercial item.’.

SEC. 7012. PREFERENCE FOR ACQUISITION OF COMMERCIAL ITEMS.

Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.), as amended by section 7011, is further amended by adding after section 315 the following new section:

‘SEC. 315A. PREFERENCE FOR ACQUISITION OF COMMERCIAL ITEMS.

‘(a) PREFERENCE- (1) The head of each executive agency shall ensure that, to the maximum extent practicable--

‘(A) requirements of the executive agency with respect to a procurement of supplies are stated in terms of--

‘(i) functions to be performed,

‘(ii) performance required, or

‘(iii) essential physical characteristics;

‘(B) such requirements are defined so that commercial items may be procured to fulfill such requirements; and

‘(C) such requirements are fulfilled through the procurement of commercial items.

‘(2) The head of an agency shall ensure that, to the maximum extent practicable, requirements of the agency with respect to a procurement of supplies are defined so that nondevelopmental items may be procured to fulfill such requirements in any case in which commercial items that fulfill the requirements of the agency are not available.

‘(b) IMPLEMENTATION- The head of each executive agency shall ensure that procurement officials in that executive agency, to the maximum extent practicable--

‘(1) acquire commercial items to meet the needs of the executive agency;

‘(2) require prime contractors and subcontractors at all levels under the executive agency contracts to incorporate commercial items as components of items supplied to the executive agency;

‘(3) modify requirements in appropriate cases to ensure that the requirements can be met by commercial items;

‘(4) state specifications in terms that enable and encourage bidders and offerors to supply commercial items in response to the solicitations of the executive agency;

‘(5) revise the procurement policies, practices, and procedures of the executive agency that are not required by law to reduce any impediments in those policies, practices, and procedures to the acquisition of commercial items; and

‘(6) require training of appropriate personnel in the acquisition of commercial items.

‘(c) EXISTING OR PRIOR SOURCES OF NONDEVELOPMENTAL ITEMS- (1) Notwithstanding subsection (a), the head of an executive agency may, until five years after the date of the enactment of the Federal Acquisition Improvement Act of 1994, determine that it is in the Government’s interests to permit existing or prior sources of nondevelopmental items to participate in a competition for a commercial item in a case in which a nondevelopmental item will compete with a commercial item under the same terms, conditions, and evaluation and award criteria.

‘(2) Nondevelopmental items furnished by an existing or prior source that must be modified to meet the requirements of a solicitation for commercial items may be offered under such a solicitation, but only in a case in which the modifications--

‘(A) are necessary to comply with the Government’s solicitation requirements; and

‘(B) do not significantly alter the function or essential physical characteristics of the items to be supplied.

‘(3) The policies, procedures, solicitation provisions, and contract clauses applicable to commercial items under this chapter also shall apply to nondevelopmental items furnished by an existing or prior source that is permitted to participate in a competition conducted under this title.

‘(d) PRELIMINARY MARKET RESEARCH- (1) The head of an executive agency shall conduct market research appropriate to the circumstances--

‘(A) before developing new specifications for a procurement by that executive agency; and

‘(B) before soliciting bids or proposals for a contract in excess of the simplified acquisition threshold.

‘(2) The head of an executive agency shall use the results of market research to determine whether there are commercial items available that--

‘(A) meet the requirements of the executive agency;

‘(B) could be modified to meet such requirements; or

‘(C) could meet such requirements if those requirements were modified to a reasonable extent.’.

SEC. 7013. PRICING DOCUMENTATION FOR COMMERCIAL ITEMS.

(a) IN GENERAL- Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.), as amended by section 7012, is further amended by adding after section 315A the following new section:

‘SEC. 315B. PRICING DOCUMENTATION FOR COMMERCIAL ITEMS.

‘(a) REQUIREMENT FOR DETERMINATION OF PRICE REASONABLENESS- (1) When the price of a commercial item is based on adequate price competition or on established catalog or market prices of items sold in sufficient quantities to the general public, the contracting officer shall presume that the price contained in the most advantageous evaluated offer (price and all other factors considered) received in response to a solicitation, or a price based on established catalog or market prices, is fair and reasonable unless the contracting officer has information that the price is not fair and reasonable. Before the award of a contract for which price is based on catalog or market prices, the contracting officer shall make reasonable efforts to establish the currency and accuracy of such prices.

‘(2) When the price of a commercial item is not presumed fair and reasonable under paragraph (1), the contracting officer shall use price analysis to determine whether the price is fair and reasonable.

‘(3) When required by the contracting officer before award of a contract or contract definitization, the offeror shall promptly furnish documentation, in the form regularly maintained in commercial operations, adequate to demonstrate the market price of the item or items or otherwise needed to establish a fair and reasonable price. All documentation received from an offeror, if not otherwise in the public domain and if requested by the offeror and marked as proprietary, shall be treated by the Government as confidential and exempt from disclosure to the extent permitted by section 552 of title 5. In this paragraph, the term ‘contract definitization’ means agreement to contractual terms, specifications, and price.

‘(4) In any case in which a contracting officer is able to determine under paragraph (1) or (2) that a price is reasonable, the procurement shall be exempt from section 304B of this title.

‘(5) In any case in which a contracting officer is unable to determine under paragraph (1) or (2) that a price is reasonable, the contracting officer may require cost or pricing data under section 304B.

‘(b) GOVERNMENT’S RIGHT TO AUDIT- (1) The United States shall have the right to audit all documentation provided by an offeror under subsection (a)(3) and all books and records of the offeror directly relating to such documentation, except that, if the offeror has made no representation as to the completeness of the documentation supplied, the United States shall have no right to audit for completeness. When contract price is established under this section, the United States shall have no audit rights other than those set out in this subsection.

‘(2) The right under this subsection shall expire--

‘(A) one year after the date of commencement of performance of the contract, or one year after the date of commencement of performance of the modification of the contract, with respect to which the information was provided; or

‘(B) on such other date agreed upon by the parties at the time of contract award or contract definitization.’.

(b) CROSS REFERENCE- Section 304B of the Federal Property and Administrative Services Act of 1949, as added by section 1251, is amended by adding at the end the following new subsection:

‘(h) ADDITIONAL EXCEPTIONS REGARDING COMMERCIAL ITEMS- For provisions relating to additional exceptions for procurements of commercial items, see section 315B of this title.’.

SEC. 7014. REGULATIONS ON ACQUISITION OF COMMERCIAL ITEMS.

Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.), as amended by section 7013, is further amended by adding after section 315B the following new section:

‘SEC. 315C. REGULATIONS ON ACQUISITION OF COMMERCIAL ITEMS.

‘(a) IN GENERAL- The Administrator for Federal Procurement Policy shall prescribe regulations to implement sections 315 through 315E. The regulations shall include provisions implementing the preference for commercial items set out in section 315A.

‘(b) TERMS AND CONDITIONS- The regulations prescribed under subsection (a) shall contain a set or sets of terms and conditions to be included in contracts for the acquisition of commercial end items. Such terms and conditions shall, to the maximum extent practicable, include only those contract clauses that are determined by the agency head to be--

‘(1) required to implement provisions of law applicable to commercial item acquisitions; or

‘(2) consistent with standard commercial practice.

‘(c) TERMS AND CONDITIONS FOR COMPONENTS- Such regulations shall provide that a prime contractor furnishing commercial items or items other than commercial items as items or components shall not be required to apply to any of its divisions, subsidiaries, or affiliates or any of its subcontractors or suppliers that are furnishing commercial items as components any clause, term, or condition except those determined by the head of the agency to be--

‘(1) required to implement provisions of law applicable to subcontractors furnishing commercial items; or

‘(2) determined to be consistent with standard commercial practice.

‘(d) MARKET ACCEPTANCE- The regulations prescribed under subsection (a) shall provide that, under appropriate conditions, the agency head may require an offeror to demonstrate, as a condition for being considered responsive, that the items offered meet, among other criteria, market acceptance criteria, unless such item has been satisfactorily supplied to an executive agency under current or recent contracts for the same or similar requirements.

‘(e) USE OF FIXED PRICE CONTRACTS- The regulations prescribed under subsection (a) shall include a requirement that firm, fixed price contracts, or fixed price contracts with economic price adjustment provisions, be used for the acquisition of commercial items and components.

‘(f) TERM OF CONTRACTS- The regulations prescribed under subsection (a) shall provide that, to the extent practicable, contracts for acquisition of commercial items shall not require contract performance for a term longer than customary industry practice for the item being acquired. A contracting officer may include in a contract provisions for economic price adjustment if an extended period of performance under the contract cannot be avoided.

‘(1) permit, to the maximum extent practicable, a contractor under a commercial items acquisition to use the existing quality assurance system of the contractor as a substitute for compliance with an otherwise applicable requirement for the Government to inspect or test the commercial items before the contractor’s tender of those items for acceptance by the Government;

‘(2) require that, to the maximum extent practicable, the executive agency take advantage of warranties (including extended warranties) offered by offerors of commercial items and use such warranties for the repair and replacement of commercial items; and

‘(3) set forth guidance regarding the use of past performance of commercial items and sources as a factor in contract award decisions.’.

SEC. 7015. PRINCIPLE OF CONSTRUCTION WITH FUTURE LAWS.

Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.), as amended by section 7014, is further amended by adding after section 315C the following new section:

‘SEC. 315D. PRINCIPLE OF CONSTRUCTION WITH FUTURE LAWS.

‘A provision of law enacted after the date of the enactment of the Federal Acquisition Improvement Act of 1994 may not be construed as modifying or superseding any provision of sections 315 through 315E unless that provision of law specifically refers to this section and specifically states that such provision of law modifies or supersedes such provision of those sections.’.

SEC. 7016. INAPPLICABILITY OF CERTAIN PROVISIONS OF LAW.

Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.), as amended by section 7015, is further amended by adding after section 315D the following new section:

‘SEC. 315E. INAPPLICABILITY OF CERTAIN PROVISIONS OF LAW.

‘(a) PROVISIONS INAPPLICABLE TO PRIME CONTRACTORS- Procurements of commercial items shall not be subject to the following provisions of law (or regulations prescribed under such provisions):

‘(1) Section 303G of this Act (relating to prohibition on limitation of subcontractor direct sales).

‘(2) Section 304(a) of this Act (relating to prohibition on contingent fees).

‘(5) The Drug-Free Workplace Act of 1988 (subtitle D of title V of Public Law 100-690; 41 U.S.C. 701 et seq.).

‘(b) PROVISIONS INAPPLICABLE TO SUBCONTRACTORS AND OTHER ENTITIES-

‘(1) LAWS INAPPLICABLE- The following provisions of law (and regulations prescribed under such provisions) shall not apply to any entity described in paragraph (2):

‘(A) Each provision of law listed under subsection (a).

‘(B) The Act of March 3, 1933, commonly referred to as the ‘Buy American Act’ (41 U.S.C. 10a-10c).

‘(2) COVERED ENTITIES- Paragraph (1) applies to each of the following:

‘(A) Any division, subsidiary, or affiliate of a prime contractor (other than the division, subsidiary, or affiliate that is contracting with the Government under the prime contract) or of a subcontractor of a prime contractor, if such division, subsidiary, or affiliate is furnishing a commercial item to the prime contractor or subcontractor for purposes of carrying out the prime contract or subcontract.

‘(B) Any subcontractor or supplier of a prime contractor, if the subcontractor or supplier is furnishing a commercial item to the prime contractor for purposes of carrying out the prime contract.

‘(c) DEFINITION- In this section, the term ‘prime contractor’ means a person under contract directly with the Federal Government, other than the Department of Defense.’.

(a) INAPPLICABILITY OF PROHIBITION ON LIMITING SUBCONTRACTOR DIRECT SALES TO THE UNITED STATES- Section 303G of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253g), as amended by section 4042(a), is further amended by adding at the end the following new subsection:

‘(d) An agreement between the contractor in a contract for the acquisition of commercial items and a subcontractor under such contract that restricts sales by such subcontractor directly to persons other than the contractor may not be considered to unreasonably restrict sales by that subcontractor to the United States in violation of the provision included in such contract pursuant to subsection (a) if the agreement does not result in the Federal Government being treated differently with regard to the restriction than any other prospective purchaser of such commercial items from that subcontractor.’.

(b) INAPPLICABILITY OF REQUIREMENT FOR CONTRACT CLAUSE REGARDING CONTINGENT FEES- Section 304(a) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 254(a)), as amended by section 4042(b), is further amended by inserting before the period at the end of the sentence added by section 4042(b) the following: ‘or to a contract for the acquisition of commercial items’.

Subtitle C--Acquisitions Generally

Section 5152 of the Drug-Free Workplace Act of 1988 (subtitle D of title V of Public Law 100-690; 41 U.S.C. 701 et seq.), as amended by section 4054, is further amended by inserting after the matter inserted by such section 4057 the following: ‘, other than a contract for the procurement of commercial items (as defined, as applicable, in section 315 of the Federal Property and Administrative Services Act of 1949 or section 2281 of title 10, United States Code),’.

‘(B) The requirements of paragraph (3)(B) shall not apply to bids or proposals for contracts for the purchase of commercial items, as defined in section 4(12) of this Act. The Administrator shall promulgate regulations establishing appropriate time limits (but not less than 5 working days) for the submission of such bids or proposals in response to the notice required by paragraph (1)(A).’.

SEC. 7023. ADDITIONAL RESPONSIBILITIES FOR ADVOCATES FOR COMPETITION.

Section 20(c) of the Office of Federal Procurement Policy Act (41 U.S.C. 418(c)) is amended to read as follows:

‘(c) The advocate for competition for each procuring activity shall be responsible for promoting full and open competition, promoting the acquisition of commercial items and other nondevelopmental items, and challenging barriers to such acquisition, including such barriers as unnecessarily restrictive statements of need, unnecessarily detailed specifications, and unnecessarily burdensome contract clauses.’.

SEC. 7024. PROVISIONS NOT AFFECTED.

Nothing in this title shall be construed as modifying or superseding, or intending to impair or restrict authorities or responsibilities under, any of the following provisions of law:

(1) Section 2323 of title 10, United States Code.

(2) Section 8(a) of the Small Business Act (15 U.S.C. 637(a)).

(3) Title IX of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 541 et seq.), popularly referred to as the ‘Brooks Architect-Engineers Act’.

(5) The Act of June 25, 1938 (41 U.S.C. 46-48c), that was revised and reenacted in the Act of June 23, 1971 (85 Stat. 77), popularly referred to as the ‘Javits-Wagner-O’Day Act’.

SEC. 7025. COMPTROLLER GENERAL REVIEW OF FEDERAL GOVERNMENT USE OF MARKET RESEARCH.

(a) REPORT REQUIRED- Not later than two years after the date of the enactment of this Act, the Comptroller General of the United States shall submit to the Congress a report on the use of market research by the Federal Government in support of the procurement of commercial items and nondevelopmental items.

(b) CONTENT OF REPORT- The report shall include the following:

(1) A review of existing Federal Government market research efforts to gather data concerning commercial and other nondevelopmental items.

(2) A review of the feasibility of creating a Government-wide data base for storing, retrieving, and analyzing market data, including use of existing Federal Government resources.

(3) Any recommendations for changes in law or regulations that the Comptroller General considers appropriate.

TITLE VIII--MISCELLANEOUS PROVISIONS

SEC. 8001. EDUCATION AND TRAINING.

(2) by striking out the semicolon at the end of subparagraph (B) and inserting in lieu thereof ‘; and’; and

(3) by adding at the end the following new subparagraph:

‘(C) establish policies and procedures for the establishment and implementation of education and training programs authorized by this Act, including the establishment and implementation of training, in conjunction with the General Services Administration, for critical procurement personnel designed to increase the participation of small business concerns owned and controlled by socially and economically disadvantaged individuals, women, and other minorities in procurement activities conducted by an executive agency.’.

Section 2386 of title 10, United States Code, is amended by striking out paragraphs (3) and (4) and inserting in lieu thereof the following:

‘(3) Technical data and computer software.

‘(4) Releases for past infringement of patents or copyrights or for unauthorized use of technical data or computer software.’.

SEC. 8003. COOPERATIVE PURCHASING.

Section 201(b) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 481(b)) is amended to read as follows:

‘(b)(1) The Administrator may provide any of the services specified in subsection (a) of this section to any other Federal agency or mixed ownership corporation (as defined in chapter 91 of title 31, United States Code).

‘(2) The Administrator may provide for the utilization of Federal supply schedules or other schedule contracts by any of the following entities upon their request:

‘(A) The various States and their political subdivisions, including local governments, or any department or agency thereof.

‘(B) The District of Columbia and the Commonwealth of Puerto Rico.

‘(C) Indian tribal governments.

‘(3) The authorization provided in this subsection shall not be construed to allow ordering of existing stock or inventory by the entities listed in paragraph (2) from federally owned and operated, or federally owned and contractor-operated, supply depots, warehouses, or similar facilities.’.

SEC. 8004. SENSE OF CONGRESS ON NEGOTIATED RULEMAKING.

(a) FINDINGS- The Congress finds the following:

(1) The use of negotiated rulemaking or similar policy discussion group techniques is an appropriate tool for--

(C) achieving more productive and equitable relationships between the Federal Government and the regulated segments of the private sector.

(2) The use of negotiated rulemaking or similar techniques in Federal procurement regulations could be appropriate given the extreme complexity and intricate interactions between buyer and seller in Federal procurements.

(b) SENSE OF CONGRESS- It is the sense of Congress that, in prescribing acquisition regulations, the Federal Acquisition Regulatory Council should consider using negotiated rulemaking procedures in accordance with sections 561 through 570 of title 5, United States Code, or similar techniques intended to achieve the benefits described in subsection (a)(1).

The Office of Federal Procurement Policy Act (41 U.S.C. 401 et seq.) is amended by adding at the end the following new section:

‘SEC. 30. MANAGEMENT POLICIES.

‘(a) REQUIREMENT FOR GOVERNMENT-WIDE WORKFORCE POLICIES- The Administrator for Federal Procurement Policy shall extend Government-wide the defense acquisition workforce policies contained in chapter 87 of title 10, United States Code. In extending policies Government-wide, the Administrator may modify such policies as necessary to recognize differences between and among defense and nondefense departments and agencies.

‘(b) DESIGNATION OF ACQUISITION POSITIONS- After consultation with the heads of agencies, the Administrator shall establish policies and procedures for agency heads to designate acquisition positions and to manage employees serving in the designated acquisition positions. Such policies and procedures--

‘(2) shall address accession, education, training, and career development of employees serving in acquisition positions.

‘(c) SMALL AGENCY NEEDS- In carrying out this section, the Administrator shall take due consideration of the needs of small agencies in formulating and implementing policy and programs under this section to ensure that the benefits of such policy and programs accrue to small agencies.

‘(d) UNIFORMITY- (1) Subject to paragraph (2), the Administrator shall ensure that, to the maximum extent practicable, the acquisition workforce policies and procedures developed pursuant to this section are uniform in their implementation throughout the executive agencies.

‘(2) With respect to acquisition workforce policies and procedures, the Department of Defense shall be subject only to the requirements of chapter 87 of title 10, United States Code.

‘(e) FEDERAL ACQUISITION INSTITUTE- Subject to the authority, direction and control of the Administrator, the Director of the Federal Acquisition Institute shall ensure that the policies established under this section are implemented throughout the Federal Government. The Administrator for General Services, with the concurrence of the Administrator for Federal Procurement Policy, may establish such additional positions in the Federal Acquisition Institute as may be necessary to carry out the preceding sentence.

‘(f) REGULATIONS- The Administrator shall prescribe such regulations as may be necessary to carry out the purposes of this section.’.

‘(a) REVIEW- The Secretary of Defense shall conduct a review of any proposed acquisition of a business concern that is a critical United States defense supplier with respect to which the Attorney General or the Federal Trade Commission receives notice under the antitrust laws. In conducting such review, the Secretary shall assess the likely effect of the proposed acquisition (if carried out) on the policy objectives for the national technology and industrial base (as set forth in section 2501(a) of this title) and on such other considerations relating to national security as the Secretary considers appropriate.

‘(b) COMMUNICATION OF VIEWS OF SECRETARY- In any case in which the Secretary determines, as the result of a review and assessment under subsection (a), that a proposed acquisition is likely to have an appreciable effect (whether positive or negative) on the policy objectives for the national technology and industrial base or on other considerations relevant to national security (as determined by the Secretary), the Secretary shall immediately communicate that determination, in writing, to the Attorney General and the Federal Trade Commission. The Secretary shall include in such communication the Secretary’s evaluation concerning the proposed acquisition.

‘(c) DEFINITION- In this section, the term ‘critical United States defense supplier’ means a company organized under the laws of the United States that is--

‘(1) a contractor or critical subcontractor for a major system, as defined in section 2302(9) of this title;

‘(2) a contractor for a contract awarded to a particular source pursuant to paragraph (3) of section 2304(c) of this title for the reasons described in clause (A) of that paragraph; or

‘(3) in such other category as the Secretary of Defense may prescribe by regulation as being critical to the national technology and industrial base.’.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of such subchapter is amended by adding at the end the following new item:

‘Sec. 312. Assignment and delegation of procurement functions and responsibilities.

‘Sec. 313. Determinations and decisions.

‘Sec. 314. Undefinitized contractual actions: restrictions.

‘Sec. 315. Definitions relating to procurement of commercial items.

‘Sec. 315A. Preference for acquisition of commercial items and other nondevelopmental items.

‘Sec. 315B. Pricing documentation for commercial items.

‘Sec. 315C. Regulations on acquisition of commercial items.

‘Sec. 315D. Principle of construction with future laws.

‘Sec. 315E. Inapplicability of certain provisions of law.

‘TITLE IV--FOREIGN EXCESS PROPERTY

‘Sec. 401. Disposal of foreign excess property.

‘Sec. 402. Methods and terms of disposal.

‘Sec. 403. Proceeds; foreign currencies.

‘Sec. 404. Miscellaneous provisions.

‘TITLE VI--GENERAL PROVISIONS

‘Sec. 601. Applicability of existing procedures.

‘Sec. 602. Repeal and saving provisions.

‘Sec. 603. Authorization for appropriations and transfer of authority.

‘Sec. 604. Separability.

‘Sec. 605. Effective date.

‘TITLE VIII--URBAN LAND UTILIZATION

‘Sec. 801. Short title.

‘Sec. 802. Declaration of purpose and policy.

‘Sec. 803. Disposal of urban lands.

‘Sec. 804. Acquisition or change of use of real property.

‘Sec. 805. Waiver during national emergency.

‘Sec. 806. Definitions.

‘TITLE IX--SELECTION OF ARCHITECTS AND ENGINEERS

‘Sec. 901. Definitions.

‘Sec. 902. Policy.

‘Sec. 903. Requests for data on architectural and engineering services.

‘Sec. 904. Negotiation of contracts for architectural and engineering services.’.

(b) AMENDMENTS FOR STYLISTIC CONSISTENCY-

(1) OFFICE OF FEDERAL PROCUREMENT POLICY ACT- The Office of Federal Procurement Policy Act (41 U.S.C. 401 et seq.) is amended so that the section designation and section heading of each section of such Act is in the same form and typeface as the section designation and heading of this section.

(2) FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949- The Federal Property and Administrative Services Act of 1949 (41 U.S.C. 471 et seq.) is amended so that the section designation and section heading of each section of such Act is in the same form and typeface as the section designation and heading of this section.

(d) CROSS REFERENCE CORRECTIONS- Section 3552 of title 31, United States Code, is amended--

(1) by striking out ‘section 111(h)’ and inserting in lieu thereof ‘section 111(f)’; and

(2) by striking out ‘759(h)’ and inserting in lieu thereof ‘759(f)’.

(e) CONSISTENCY OF TERMINOLOGY WITH CUSTOMARY USAGE- Section 304(b) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 254(b)) is amended by striking out ‘per centum’ each place it appears and inserting in lieu thereof ‘percent’.

TITLE IX--EFFECTIVE DATES AND REGULATIONS

SEC. 9001. EFFECTIVE DATES.

(a) IN GENERAL- Except as provided in subsection (b), this Act and the amendments made by this Act shall apply with respect to any contract for which a solicitation for bid or proposal is issued after--

(1) 30 days have expired after the issuance in final form of revisions to the Federal Acquisition Regulation pursuant to section 10002; or

(2) 180 days have expired after the date of the enactment of this Act;

whichever is earlier.

(b) SPECIFIC EFFECTIVE DATES- (1) Titles III and VI of this Act, and the amendments made by such titles, shall take effect on the date of the enactment of this Act.

(2) Subtitle D of title I of this Act, and the amendments made by such subtitle (relating to procurement protests), shall apply with respect to any protest filed after the expiration of the 90-day period beginning on the date of the enactment of this Act.

SEC. 9002. REGULATIONS.

Not later than 150 days after the date of the enactment of this Act, the Federal Acquisition Regulation (referred to in section 25(c) of the Office of Federal Procurement Policy Act (41 U.S.C. 421(c))) shall be revised, in final form, to implement this Act and the amendments made by this Act.

Amend the title so as to read: ‘A bill to amend title 10, United States Code, the Federal Property and Administrative Services Act of 1949, and the Office of Federal Procurement Policy Act to improve the Federal acquisition process, and for other purposes.’.

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Union Calendar No. 303

103d CONGRESS

2d Session

H. R. 2238

[Report No. 103-545, Parts I and II]

A BILL

To amend laws relating to Federal procurement, to authorize functions and activities under the Federal Property and Administrative Services Act of 1949, and for other purposes.

June 17, 1994

Reported from the Committee on Armed Services with amendments, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed